While serving as a firefighter on the north shore of Chicago, Jamie saw how much energy was wasted by leaving lights on overnight in the firehouse. He ran calculations and aspired to find a way to both save energy and reduce costs. Shortly thereafter, Verde was born.
There are so many ways to get started in making your workplace more sustainable, but it takes buy in from the ownership. Whether a huge corporation or a small business, your efforts at making your office or workplace better can be thwarted by management if they are not on board.
Here are 5 key ways to bring a little bit of your environmental passion into work, that won’t create too much disagreement and/or cost your company too much money. You won’t need to hire an expensive energy consultant or engage waste consulting firms, but instead can start with these 5 steps.
While composting gets a bad wrap at times (smelly, hard to do, flies), we have used a great service at our office that composts without the hassle from Urban Canopy. They have a bucket that gets picked up every two weeks, and it works great for coffee, tea, and a ton of food waste. Since they are an industrial composter, they can take more things like diary and meat products – so it opens up more opportunities. We have not had any smell or fruit flies issues at work, which is a huge plus.
Its not as sexy as a solar panel or LED fixture with daylight controls, but it is important. Buying local can happen several ways, and they can often save a business money at the same time. As long as you don’t let it impact your main role at a company, few operations would complain if you brought them an alternative vendor that is local and would cost less – it just sometimes takes a bit of digging.
One of our favorite ways to buy local is to pick up lunch or meals at a local restaurant, instead of just getting delivery from the normal corporate place. We have a local sandwich shop near us called Spoken that is a favorite of the office, we can walk or bike to for picking up food, and does a great job of keeping food waste to a minimum. Nothing makes our office upset like mountains of styrofoam, especially in city like Chicago that is known for lackluster recycling. I am never upset to show up to an event that is catered by the Corner Bakery, but I especially notice places that take time and order from local vendors.
Another example of buying local was an analysis we did on purchasing our outdoor LED fixtures for our clients through China or from a local vendor, Jarvis Lighting. While purchasing from China is less expensive, we were constantly running into supply chain issues. Occasionally, we had to air ship fixtures from overseas, costing both a fortune on our bottom line and our environmental impact (shiping via air has 50 times the carbon impact as shipping cargo via boat. Our local vendor not only supplies a majority of our exterior lighting solutions, but they also have a lean manufacturing model and can turn around products for us in several days. The impact on customers satisfaction, as well as environmental benefits, far exceed saving a few dollars on the fixture cost.
Bike Sharing is a good option for employees that mostly take public transit, but occasionally might need to take a Lyft or Uber. A bike sharing membership costs less than $80 a year in Chicago with Divvy, and you can either subsidize it all or partial for employees. Especially for those that occasionally go downtown, Divvy can be a super inexpensive perk that makes employees pumped up (pun intended).
Divvy will even consider your business as a spot for one of their stations, if you are interested in a membership for employees. While that may not make a huge difference, if you are a restaurant or bar – a Divvy station nearby could increase your traffic.
Ok, so I often go on rants and tangents about smart thermostat solutions. There is a reason for this, and it isn’t the hot and cool new features and styles.
Smart thermostats give control over an empty business. Business owners, especially in the early years, are more often to be the only one at the office late at night or early in the morning. I can’t tell you then number of times I have been alone on a Saturday and realized that we left the heat at 72 all weekend long.
With a Nest or Ecobee, you can login from your phone or desktop browser and lower the heat. Better yet, they will use their smart powers to notice when the space is empty and automatically set back the heat or cooling.
Business owners also love control, or at least solutions to problems. Have a customer coming by on a Saturday in the summer in an unusual time – you can make sure to pre-cool the space an hour before to make sure it is comfortable when they arrive. In the past, you had to just leave the hold function on a programmable thermostat, and it may just override and set back. Smart thermostats give you a ton more options for savings on both heating and cooling, and often make a space more comfortable for employees.
This is one of the least popular moves that I have made, but I strongly believe in responsibly sourcing water for an office.
We used to use a water service, with a cooler that provided cold and semi hot water. The tea was never good, and the cool water was refreshing. However, the water bottles were brought by truck weekly, and the environmental impact on that is not insignificant. The unit also always draws water.
About 18 months ago, we put in a water purification system from Berkeley. It costs around $250, which took almost a year to payback in terms of our monthly water costs. However, it will last literally forever and will continue to saving us money on both the water service and electricity for years to come.
The best part for me – we got a $10 tea kettle and now have good hot tea, not that tepid tea water out of those water coolers.
After all, those of us in Chicago have the greatest resource on the planet in vast quantities just miles from us – we don’t need trucks to drive it to us. We can save that for our fancy french wine (or $3 chuck in my house).
**Note, in 2019, we added Tetracycle recycling to our office area, recycling almost 95% of our waste. In addition, we have brought an in-house recycling equipment to our warehouse in 2020 – so we not only recycle more, but require less transportation related expenses for our recycling efforts. All fluorescent lamps are crushed down into large bins for recycling instead of packaged into cardboard boxes for transit.
Oakton Community College has invested a ton in LEED certified buildings and solar panels on their buildings. They also benefit from an amazing campus with a lot of natural woods and natural area around them. And their greatest resource – their students passion. Hear how student groups led the ban on plastic bottles sold on campus at Oakton.
Debra’s favorite animal at the Brookfield Zoo you ask? The egg laying mammal called the Echidna.
Speaker 1:Welcome back to episode 13 of the Verde podcast, every week we talk to local community leaders and entrepreneurs to understand the real story that doesn’t make it to the spotlight. But is how actual businesses are actually built here in Chicago.
Today we have Debra who is the Sustainability Specialist at Oakton Community College, I’m particularly excited, although I tell everyone every week, I’m very excited to interview them. I’m particularly excited, because I was just telling her a Sustainability role, trying to do good in the public sector it’s like a really interesting position to me.
And one that I’ve often thought a lot about, and would have loved to have that position, you know, years ago, so it’s a … I’m particularly personally raged to be with you today Debra.
Debra:Well thanks, I’m excited to tell you all about what I do.
Speaker 1:Good, very good. So tell me a little bit about how and why you joined Oakton, and what motivated you to join the sustainability field in general?
Debra:Okay. So my background from the time I was in high school, was actually focused on animals and the environment. So I initially thought that I wanted to be a Veterinarian, I was one of those kids that volunteered at the local animal shelter, got an internship at my local vet office, and started working that route.
But then somewhere around Junior year in high school, I really started thinking more about Zoos as a field to pursue, and so when I went into college, my goal was to become a Zookeeper. And so I kept up some of that animal work, and then got an internship at Brookfield Zoo, keeping for animals, and then that became a seasonal position.
Speaker 1:Sorry, what is that? What do you study to become a Zookeeper? Is there like a program? Or is it pretty open to whoever?
Debra:It’s pretty open. My background was in Biology, so I majored in Biological Sciences for my Bachelor Degree. And then did that extra curricular involvement working with animals. But I have Zookeeper friends who have backgrounds in philosophy, and psychology, who were lawyers, who were teachers, so there’s lots of different ways to get into it, I think most of us have a background in Zoology, Ecology, Biology, or Psych is a big one too, because of animal training.
And then I really got interested into conservation as whole, and conservation education, and training, so I did my Master’s Degree at Columbia, New York, in Conservation Biology, and I had spent some time there at the Central Park Zoo, and the Bronx Zoo, so I got to work with animal observation, and research as well as public evaluation.
So collecting surveys from guests about their experiences, and then taking that data and compiling it, to make our experiences better. And from there, went back to Brookfield Zoo, where I did conservation leadership and training for next seven and half years. So working with outreach programs, doing education, high school volunteer programs, the college internship program, everything was built around getting people engaged with nature. Helping them to build that relationship, and then going out and doing something to protect the natural world.
So everything at the zoo, was very focused on conservation action. What could each of us do, to make a difference, and improve the world around us? And that naturally led to my thoughts about sustainability. So we thought of it as conservation behavior, conservation action, it’s the same thing. So it’s what little things we can each do, as well as big things to make a difference with the products that we’re using, the ecosystems we’re impacting, basically reducing our impact on the world.
So when I had kids, and realized that a full time job was really demanding with a long commute, and wanting to be there with them. I started looking for opportunities that were part-time, where I could still be invested in a career where I was making a difference that fit along my passions and pursuits, but also allowed me to spend more time with my kids.
And around the same time I started having these thoughts, this position at Oakton Community College opened up. So 2014 this position was created, brand new, it was 20 hours a week, three miles from my home, and I was finally able to have a community impact in my own direct community, and have broader reach of some of my interests, and my skills in a way that I never had before.
So of course I love that I’m still doing education, because it’s a very big piece of me, but it lets me look at saving the world in a different way than I had been before. So I think it was a natural fit, and it really allowed me again, to have that work-life balance, that I really needed at the time. And to grow in this position to the point that just this summer I became full time. So my kids are both in school full time, I’m full time, it was all just meant to be. I suppose.
Speaker 1:Yeah. Yeah it’s hard to find work-life balance no matter what. It’s almost like seemingly impossible, so it’s cool that you found it.
Debra:Yeah and it’s really been exciting for me and with my kids. Like everything that I’m doing is about behavior change here at the college, which I think we’ll talk a little bit more about, and that can be so tricky. So having kids at home that I can help shape, this conservations sustainability ethic in, that they’re just are used to recycling, and composting, and picking up trash when we go for walks, is really meaningful to me.
Speaker 1:I have a three year old, and love when like she throws something on the ground, and I’m like, May, pick that up. We don’t litter. And she just looks at me like, it doesn’t make any sense why we wouldn’t just litter. And it’s an incredible blank slate to kind of like really influence your values on, which I guess sounds really evil.
Debra:It’s scary too.
Speaker 1:Yeah, but it’s good for sure.
Debra:It’s a big responsibility. And actually one of my favorite stories with my kids. Is we took them the Sox park to go see a game, and we were walking out afterwards through the parking lot, and my daughter who was probably four at the time, started trying to pick up all the broken glass in the parking lot from beer bottles that had been smashed. And I had to actively tell her, no just leave it on the ground.
And it was so against everything she felt, like pulled to do. So understanding that there’s a time and a place to pick up trash, and a four year old with broken beer bottles probably isn’t the time or the place.
Speaker 1:Well that’s cool. So I’ll dive into some more questions. But are you still very involved in the zoo community? Like now there’s two things I’m really interested in, sustainability at community college and now a zoo community. Like are there zoo parties? Things like that?
Debra:You know the zoo is like a second home to me. So I built a lot of really important friendships and professional relationships there. So even though some of my colleagues, who I worked with have gone on to other zoos, or other realms, we still do have this network.
And I’ve got really close friends who are going to be a part of my life from that experience. So even though I don’t go to the Association of Zoos and Aquariums Conferences anymore, or am involved day to day in volunteering, or work tasks with them. We go often with my kids, we’ve got annual memberships, so we hang out there and visit the zoo from a guest perspective, but then also, when I’m involved in things like Chicago Wilderness in the region, or some nature education, nature play experiences, as part of my role here at Oakton, I’m seeing my colleagues from that other world.
And so we’re still integrating, we still communicate about crossover, and opportunities where our respective fields can align because there are a lot of them. I’ve been fortunate to lead a group of students from here at Oakton on a tour of Brookfield Zoo, so we went on a field trip, and I got to talk to them about the conservation stories of the animals as well as career training for them, if they’re thinking about a path like this.
I spend a lot of time kind of dispelling some myths about zoos, so I’m of course and advocate for a well-run accredited zoo, or aquarium. And I think they’re really powerful tools for conservation, education, and awareness. I know that I personally wouldn’t be in sustainability, I wouldn’t be making the life choices I did, if it hadn’t been for early introduction to animals at a zoo with my family.
So I think they’re really powerful if done correctly.
Speaker 1:Do you think that zoos, this is kind of a meta question I guess. But do you feel like zoos are fulfilling their kind of obligation to be leaders in that conservation space at this time in general?
Debra:Absolutely. You’ve seen zoos evolve now. Initially when they started, it was menageries. It was rich people going out, flying to exotic places, taking animals, bringing them home, and then charging people to see them. And now we’ve evolved to conservation organizations. So there is no reputable accredited zoo, that isn’t spending most of their time and energy on telling conservation stories. You see it in the signage, you see it in the way they procure resources for the zoos, and the aquariums, water conservation, their energy conservation.
If you visit, we’re fortunate here in the Chicago area to have so many accredited zoos and aquariums, well one aquarium, the Shedd Aquarium, does amazing work. They’re pushing a straw free initiative, to encourage people to reduce their plastic consumption. We’ve got so many good things that are being taught to people, who may just be coming for a good time, may just be coming to see animals, but then they walk away with really important education.
And I think that, that’s important. As well as the money that zoos are generating, if it’s not going back to the animals, and their care, and the people who care for them, it’s going to field conservation organizations. So paying for researchers in the field, in these countries of these wild animals, to help protect them to create jobs, to raise awareness, and to do really important work in the field where it’s most needed.
Speaker 1:That’s good to know. I think we don’t, as a novice to the zoo world, like I don’t know much about that. It seems like a natural fit, but I do know, and I think you and I talked about this recently, about how the aquarium has the first largest solar pv panel set up in Illinois. And it’s an investment that they chose to do for whatever reason, but that really resonated with a community member. So it’s interesting to see how they take initiatives like that, that can really be leaders where we lack leaders in this space.
Debra:Absolutely. Yeah, you’ll meet some of the most passionate people who are working at those organizations. And they’re doing it for the love of the animals, the love of the mission, and again, educating the public and getting them engaged and involved. So it was really wonderful working with conservation leadership program at the time, because I was able to take students who were interested, and engaged, but didn’t know what to do with that interest. And really watch them bud into educators, and scientists, and go on to their Ph.D’s and be field researchers.
And now I have this whole community of students that I worked with, who are now out actively saving the world, because they decided to volunteer for the zoo one summer.
Speaker 1:Do you have a personal favorite animal at the zoo?
Debra:Everyone asks me that. You know it changed every week. I love animals, so every day it’s something new. I learned a lot about Echidnas when I was there, so that’s the one I’ll pick today.
Speaker 1:I don’t know what an Echidna is.
Debra:Echidnas are an Australian animal, and they’re egg laying mammals, so they’re bizarre, and they’ve got these cute little noses, and little spikes, but they fascinating little creatures. So you can go into the Australia house they have them.
Speaker 1:Is it Echidna or just chidna?
Debra:It’s Echidna, E-C-H-I-D-N-A.
Speaker 1:Oh amazing. Okay.
Debra:And so those are fun little animals.
Speaker 1:I’ll have to tell my daughters about them tonight. Because I didn’t know there was egg laying mammals.
Debra:They’re cute. Monotremes.
Speaker 1:Are there a lot of those?
Speaker 1:Interesting. Okay. So tell me about some of your favorite parts about running initiatives that you do at Oakton? What are some of the most exciting parts and gives you the most professional satisfaction?
Debra:Yeah, so I think there’s a twofold for me. One is of course engaging with the students, so again at heart I’m really an educator, I want to make those connections, and students who are here at this college phase of their lives, are really eager for information and again, ways that they can be involved.
So when I can connect with students in a classroom, or an activity, or they have a project that they want to initiate here on campus and I can help harness their ideas and actually give them a trajectory to pursue those thoughts, and actually turn it into reality, that’s really powerful for me.
So since I’m not faculty, I don’t have a chance to really teach students or be engaged with them on a daily basis, and I think it makes those times, when I am able to do that, more important. Because they’re not as frequent.
And then the other piece is just seeing the changes that happen on campus as a result of what we’re doing in sustainability. Like I said, I was part-time until just this summer, and compiling my most recent sustainability report for the college, it was really impactful for me because on a day to day basis I may not feel like I’m making much movement, there’s so many big things I want make happen. And it’s really hard, they can’t be done in a day’s time.
So when I look back at that report, and I see all the initiatives that we’ve been able to do, with me being part-time, and not a huge team of staff working together, it’s very fulfilling to me to see how much can be done. And then how much those projects can help benefit the students on campus. Or the community. And what can grow from those.
Speaker 1:Any individual project that stands out in your mind that you’re kind of most particularly proud of?
Debra:Yeah, and it’s one that I didn’t even have much to do with. And so that’s our water bottle ban on campus. So in the spring of 2015, we had a group of students who were involved in an honor’s course, and they were learning about all kinds different social and environmental issues, and injustices that lay in those realms.
And there was a group of students that decided that they wanted to pursue a water bottle ban on Oakton’s campuses. So after learning about the environmental implications of bottling water in plastic, and then what happens to those plastic bottles. About two-thirds don’t ever even end up being recycled, they end up in the land fills, or in our waterways, and become a huge issue. But then also the social piece of taking water as a public resource from communities. Privatizing it, and then selling it back to those same individuals, they learned about all of the cultural and social implications of that practice.
So whether it be taking the water and draining aquifers, or ruining agriculture for communities, or just the price piece, the fact again, they’re taking something free, and then they’re selling it back for $5.00 a bottle or $2.00 a bottle. Whatever it is.
Speaker 1:Something we never would have paid for 30 years ago.
Debra:It’s really, it really blew them away. And so the students started working on researching this issue, and then presenting it to their peers, they would do tabling events, and workshops, and getting signatures from students. I think they collected over 1500 signatures on a petition to ban the bottle, they presented that to faculty and staff, as well as our President’s council, here on site. And our administration decided to support the students, so they said, we’ll help you to keep this issue alive, and to ban bottled water.
So the course itself was only a semester long, and what was really interesting, was after that semester, the students started working with Students for Social Justice, which is one of our student groups on campus, and they kind of handed over the reigns, and so that student club, then carried the initiative through to its implementation.
So I was involved just in supporting them, and taking care of some of the logistics, working with our President, and our Facilities director to see what we needed to do, to put this practice into place. So we were proactive and did a whole bunch of water testing, because it was at the same time as the Flint Water Crisis was occurring, people were thinking more about water. And was it safe to drink? So we were able to verify the safety and cleanliness of our drinking water on campus, we were able to get funds to put in more hydration stations, so the water bottle refills. We worked with Oakton Educational Foundation, to get a grant to provide all students with a reusable water bottle, so that they didn’t have the excuse of not having a receptacle to put the water in.
And again, just supporting the students along that path. So on November 1st, 2016 is when Oakton officially stopped selling single use plastic bottled water in the cafeterias, in the vending machines, and in the bookstore. And now it’s become a thing for our campus, it’s something notable, it was in the news, other colleges know, we aren’t the first one to do it. We followed a lot of other colleges who had. Loyola locally, connecting with students there, and finding out what did you need to do to make this happen?
We also did surveys for staff on campus, to find out how they felt about the change, which was a challenge. Because there were some people who were very passionate about it, and taking away a right of theirs, so it became a really big advocacy project, as well as awareness, and communication piece. Lots of people thought about the recycling aspect, so they, I buy my water, I recycle it, I’m good, I’m not the issue.
And we really needed to teach them about the social piece. Like where is that water coming from? How much water are you using to make that bottle, that you’re putting it in? When we’re fortunate in this area to have clean drinking water.
Speaker 1:Well the truck to transport it here, the truck to transport it away, does it actually end up in the recycling place it’s supposed to? And Chicago’s notorious for not being great about that.
Debra:Well it’s getting better.
Speaker 1:It is getting better. It is getting better, that’s for sure.
Debra:Yeah so that’s been such a powerful experience for me, and again, if had come into Oakton, and said we’re going to ban water bottles, it never would have passed. But because it was student passion, student initiative, they did their homework, they did their research, and they presented it well, they were supported. And that’s something really powerful about Oakton too.
We’re a small enough campus that if you do have a group of passionate students, you can enact really big change. And those students, then can go onto their other colleges, or universities, or jobs, and use some of those same skills they learned to make bigger changes.
Speaker 1:Yeah, well it’s particularly, that story’s particularly relevant right now, especially with the student driven gun violence legislation that they’re, or they’re policy agenda that they’re asking for. I don’t know about you, this is not really relevant, but I took my kids to the march this weekend. I thought … I personally am against, I personally support gun rights legislation, I don’t … I’m sorry, edit that out. I’m personally against any gun ownership I don’t feel like it’s really … that’s my personal … that’s my family’s agenda.
But what I was so inspired about, I normally wouldn’t go support that kind of thing. But what I was really inspired about, was that these kids were organizing it, and the policies that we make are often based on fear. You know, I’m afraid for my safety of my house, and this is something a 40 year old father like myself might have experienced and do. But the policies that we make affect these kids for the next 60, 70 years. And so it’s really refreshing, kind of like that thought that my daughter looks at that trash, and just doesn’t really … like these kids are very idealistic, and it’s kind of refreshing to feel some idealism in this world.
And it’s exciting to see, I mean I’m very optimistic that this activism of this age, is going to continue. Because while you certainly make a lot of mistakes in your … you really do dumb things when you’re that age, like it’s fun to have them directed at idealistic things, because for sure environmental action is one of those topics that the things that we do today, these kids are going to have to deal with for 80 years.
Debra:Oh absolutely. And I think, you know I was so fortunate to build such powerful relationships with teenagers, when I was working in my previous position, that any time people around me would negate the power of teenagers, so you know, oh they’re entitled and they’re lazy , and they’re this and they’re that, I had real stories of students to say, no they’re doing a lot more than a lot of us are.
And so to me that teens were able to rise up and get this power, is not surprising to me. It reaffirms what I already knew from working with my students. But it also, this is something we’ve seen throughout history, like young people change the world. And I spent some time really thinking about just all of the attention that’s being drawn to these mass shootings, and reading a bunch of articles, and hearing people from our non-white communities particularly talk about how gun violence and environmental injustice has been affecting them for so long, but you don’t hear it in the news. Right?
You don’t hear those stories. And debating on whether or not to join in this movement, if it’s not completely reflective of their own experiences, and it’s been really promising to see so many backgrounds of students coming together and saying, yeah because we all want the same thing.
And people forget that teenagers have been the one, they were protesting the Vietnam War, when we were integrating schools in the south ,the Little Rock Nine, they were 14, 15 year olds, that were subjected to awful experiences. But they made such a huge impact for future generations. And yet, we’re seeing how much still hasn’t changed, how much work there is to do.
So I love seeing the power and the engagement around teens, young adults, youth, those who are just voting in this first election, and understanding the power that comes with that civic duty, of choosing who’s in office.
Speaker 1:And not just this next election but the one two years after that’s going to be really compelling. Because those, you know, 16 year olds are going to be able to vote at that point.
Debra:Right. And I think the power, one of the things that I’ve been focusing on here too with community college is talking with students that it’s more than just Presidential elections, you voting for your school district board, or your municipal water reclamation district commissioners, all these different local opportunities, for you to have an impact and say, who’s going to speak your voice, or for you to run for one day. I’ve been really impressed with the number of students here at Oakton I’ve met, who are interested in policy. And potentially running for office one day.
And so learning all they can about they can do here to build upon their experience for their future. And I would love to have my future in the hands of some of these students that I’m working with.
Speaker 1:Yeah. For sure. I guess you’ve already talked about a big one, but what is your … what are some other creative ways you’ve seen students here push sustainability as a priority? I know you have some experience with lead buildings on campus. I’m just curious … I find it really compelling, you know that I worked in public sector for about 10 years and I just felt wall, after wall, after wall. Of like, we’re not going to do, we can talk about it but ultimately we’re not going to do it for whatever reason.
And it seems like Oakton has done a little more than the average group, so what creative things have you seen that other people listening might be able to take away as an idea?
Debra:Right. So we do have one lead building on campus. And it was being erected as I was starting. So it’s our new Science and Health Career Center, and as the name implies it’s all of our science classes. So from Biology to Physics, Chemistry, as well as all of our health careers, so Physical Therapy, we’ve got a Phlebotomy lab, we have a half a floor which is devoted to nursing. So a simulation hospital.
And so for all these students to come and go through that building, and to see the little signs about what sustainability efforts were incorporated into the creation of that space, again, it’s just that awareness, that they become used to it, as being part of their environment. And that they’re picking up some of those little things. So I think that’s been fun to experience, and to hear about the students that were in that building when I tell them I work in sustainability here.
That one of the first things they’ll say, oh I noticed those signs in the Lee Center, which is a little sense of pride for me. I helped create those signs. But even if they’re only picking up one line of information, or understanding how they’re impacting the earth just by being in that building, I think that’s powerful.
But really the biggest successes again, we’ve seen, is students. If we can get students who are engaged and are excited, channeling that passion and that energy into a project or an effort, that carries weight here. So around when I was starting, there were a couple of faculty who were engaged in creating an Environmental Studies concentration. We didn’t have anything like that here, so they took a sabbatical to go research what other colleges and universities were doing, how they wanted to shape it, what they wanted it to look like, and now we have this 19 hour, or semester hour program.
So a concentration at a community college is kind of like a minor, you know if you get an Associates Degree you can add this on by taking certain courses basically. But the way that it’s structured is that many of the courses are Gen Eds, so composition one, and intro to biology, or intro to environmental science, and so you can take your Gen Eds while getting credit for these ESC courses at the same time, and the other thing about it, is that it’s interdisciplinary.
So as opposed to just an Environmental Sciences program, where they’re just getting the science, and you’re just getting those science minded folks, it’s philosophy, and like I said, composition, it’s literature, it’s global mythology, all these different courses, that are getting students to think about the environment and sustainability and their role in the world, from different viewpoints.
And building it together into this really nice, cohesive program. So they were working on developing that, I was working very closely with them to align what students were doing in the classroom, with what changes could be done on campus. And there was such a support for the ESC of students, and other faculty members getting engaged, that it helped bolster appreciation of the sustainability work I was doing on the operations, and planning side.
And similarly, when I’m doing actions in sustainability, whether it’s putting in an electrical vehicle charging station, or trying to reduce our carbon footprint, then I can reflect it back to the students. So we can bring those topics into the classroom, they can look at real data, they can be out on our natural grounds, we have 147 acres here at the Des Plaines Campus.
Speaker 1:That’s beautiful.
Debra:Where students can cage young oaks, they can go out and do bio-diversity studies with our faculty. They can do a nature walk in their pros class, and come back and write creatively about what they experienced out in nature. So we’re able to tie so many different projects and efforts together with the number one reason we’re all here, which is to provide students an education.
So that’s been really important for us, and they received … the ESC received a National Endowment for the Humanities Grant, a very large grant, about a year ago that has enabled them to really develop some of the course work, and create a field study course, so this summer students will take 17 days, and camp out to Yellowstone along the way learning about plants, and the humanities and nature, and all these other awesome things.
So I think that, that’s been really encouraging, and any time we have a new class, a new project, students have ideas that they want to implement. I have a group of students now involved in one of the courses, who really want to push for more food waste reduction on campus. So eliminating at the source as well as composting afterwards. And hopefully with their help, we can make it happen.
They give credence to what I do.
Speaker 1:Well I think we, I like to think of everything in the business sense, because that’s what I do these days unfortunately, but it seems to me that ultimately, the leadership and the management of the school must look at the students as customers essentially, and if the customer or the student is requesting more environmental classes then that’s going to speak to them more than probably anything else.
So that’s pretty cool, do you feel like there’s kind of an uptick? I guess you’ve been here since ’14, so that’s three or four years. But do you feel like there’s a more interest now than there was three or four years ago from student driven requests for sustainability? Or it’s been consistent but just your ability to kind corral that?
Debra:I think that’s exactly it. The latter point. So I think the interest has always been there, but there wasn’t really a place to direct that interest. So we had a few faculty on site, particularly who were known for getting students to think about the environment, and sustainability in their courses, and that were powerful. But the average student didn’t really have a chance to learn about what the college was doing, or how they can provide input.
So I think just building this small sustainability center here at the college, and having me available to go to different activities, and to talk with student groups, has allowed them a place to voice what they’d like to see happen. So when we do big events, like our Fall Fest, welcoming students at the beginning of the year, we have a table.
We can ask them agreeing suggestions, what do you want the school to do? What would you like to see more of? And the first year I was here, one of the big things was more waste bins, more recycling bins, so we did that. We changed the recycling bins that we had onsite, into these multiple streamed bins that were sometimes not all together. So you would find a paper bin, or an aluminum bin, but you wouldn’t find them all next to each other.
And now we have nice single stream bins, where waste and recycling are connected. And they make that choice, but it’s always available to them. And that as well as a few other initiatives, we saw an increase from 19.7% recycling up to 36 point something recycling in our couple years. So students asked for it, they wanted it, and then they used it.
And so those opportunities where students can tell me what they’re interested in, I think are more available, which means that they’re being heard more, and we can act on them.
Speaker 1:Well that’s cool. I appreciate what you’re doing, and I think I forgot to mention this, but I was, I’m a proud Alumni of Oakton, I have my Paramedic Degree came through here. So it makes me feel, I never came on campus, because we were through the hospital, but it’s, it gives me a little bit more pride in that degree.
Debra:Oh that’s exciting. We love our Alumni.
Speaker 1:Yeah for sure. So it’s been great to hear all your stories, and I hope we can stay connected, and I hope that this kind of … you know I know you mentioned that there’s a huge network of similar professionals like you throughout the Illinois community college networks, and it sounds like you guys all kind of really helped push and pull each other towards change. But there’s a huge, as far as for community college students listening, or that are … there’s a huge job network in Illinois around this topic.
You know we have 25 employees at my company and one of the first things I look for on a resume is what did they study? It doesn’t rule out, if somebody studied something else if they’re a good fit, but it definitely gets them the interview if they studied something, one of the few that really studied a degree in sustainability is very valued for a company like mine.
Debra:Right. Which is always great to hear, because of course as a community college, a lot of time we are faced with administrators that of course, they want our students to either go on to a four year degree, or they want them to be able to get a job right after their degree. And proving that green jobs are available, and prevalent, and growing in our area, can be really tricky.
Because as you know, it’s often not going to be labeled like, Sustainability Specialist, it will be, an Engineer, a Program Manager, or an Account Manager, for a sustainable company. So we have really hard time, occasionally convincing people that these efforts are worth it, and that yes our students will be able to get a job.
So I think when they hear, individuals who have a business, in the area, that does employ students with these skills, it ramps up the appreciation, an extra little bit.
Speaker 1:Well very cool. Well thank you, I think this is a particularly interesting conversation topic. I enjoyed it.
Debra:Yeah we went all over.
Speaker 1:Yeah, we covered the basics from what was the animal? The Echidna?
Speaker 1:The Echidna, all the way to recycling water bottles.
Debra:Look him up. They’re cute.
Speaker 1:Or not, I guess. Well thanks Debra, thanks for being here, and I look forward to talking soon.
Ross and Jamie sit down in The Friendship Center’snew location on Lawrence Avenue in Chicago, where they will be extending their services to include a hot meal service for those in need. Friendship Center has been around for 30 years, but Ross as Development Director is acting like an entrepreneur to expand the service offerings and really embrace organizational transformation.
Jamie and Harold sit down in CEDAs office in the top of the 567 W Lake St building in Chicago. With a backdrop of a ton of natural sunlight and possibly the best office lighting in Chicago, Harold discusses his effective management and turn around experience at CEDA. At the time that Harold took over the organization, it was clear that one of the largest private, non-profit Community Action Agencies in the country was struggling.
Harold took on the challenge, and has since turned CEDA to a forward thinking organization with real impact in Chicago. He believes in empowering and supporting employees, and it shows.
Speaker 1 Welcome back to Episode 11 of the Verde Podcast. Every week we talk to local business leaders and entrepreneurs to understand the real story that doesn’t make it to the spot light, but is how actual businesses are actually built here in Chicago.
Toady we’ve got a fun twist on our normal interview. We’ve got Harold Rice, who is the President and CEO of CEDA, which is a very large, nonprofit here in Chicago that does some good work.
Harold Rice Thank you. Thank you.
Speaker 1 Well, Harold. If you don’t mind, start by giving us a little background about CEDA itself. How it was started and kind of the history of the organization.
Harold Rice CEDA is part of the Community Action Agency Network, nationwide. Community Action was born out of the document that was signed by President Johnson back in 1964, which was his War on Poverty. Our sole purpose is to stamp out or alleviate poverty for families and individuals. In the birth of that, the level of funding or the type of funding was what they called, “CSBG”: Community Service Block Grant Fund, that kind of kicked us off.
All we do is look at ways to bring people out of their impoverish situation and bring them to a point of self-sufficiency.
Speaker 1 You joined the organization about three and a half years ago. Tell me about what you came into, and how big was the organization, and some of the challenges, and also, where it is today and what’s happened since then.
Harold Rice Well now you’re bringing back some nightmares. CEDA was my challenge, my charge. When I took the assignment, Mr. Phelps, was to shut CEDA down. At that time, we were 206 million dollars in size, private, non-profit. The board wanted me to shut it down or reduce it from a 206 million to an eight or 10 million dollar agency, because of the dept, about 40 million dollars of dept. We had a federal investigation. We had net assets of -3.5 million.
Speaker 1 Wow.
Harold Rice And about over two million dollars of lawsuits. And violations up the wazoo.
Speaker 1 Yeah.
Harold Rice The challenge was insurmountable. They brought in a number of consulting firms. Everyone pretty much said, “Shut it down. Change the name. Make it go away.” That was the push. I’m a little hard headed. I decided to hold on to, what I thought were, the best parts, the core, of what made this organization be what it used to be. It really boils down to people.
At any organization that I take over or run, I do what I call a “one on one getting to know you.” Get to know my staff, their goals, their aspirations, their dreams, and so forth. How do we integrate that, or does it integrate?
If I find a commonality, a common ground, then I have something to work with. If I don’t, then yeah, shut it down. I found that I had a committed group of about 400 people that really believed in the mission. They were beaten down, you know, beaten up a lot, but they really believed in what they did. I figured I’d run with that.
Speaker 1 When you came in there was about 400 employees, or was there more that you had to shed some loose?
Harold Rice We had 800, and when I came in, we were about 400-500. We had to continue … You know, typically, in most organizations, your largest expense is payroll. I think I cut the number of people down to about 200. I kept cutting back in areas that we didn’t have a good handle on and we had to improve.
Speaker 1 Right.
Harold Rice I think we got down to about 200 people.
Speaker 1 How about today? Are you staying around that level or you guys trying to grow?
Harold Rice We’re about back up to 400.
Speaker 1 Oh, wow.
Harold Rice Yes.
Speaker 1 You really found a core group to build around and then you went after it?
Harold Rice Right. Right.
Speaker 1 Cool.
Harold Rice Yeah.
Speaker 1 What’s the annual budget now, compared to … ?
Harold Rice Annual budget now is about 150 million. We lost a 30 million dollar Headstart Program because of violations. We’ve solved all of the violations. We’ve cleared all of that up. It’s just a matter of, now, is this a good time to go back for Headstart? We have a couple of other initiatives that I want to focus on. My officer group and I, just yesterday, talked about, if and when to go back for Headstart.
Speaker 1 Many people, at least kind of in my circle, that may or may not be listening to this, know you through the weatherization work that CEDA does. Do you mind talking a little bit about that, and how big that is of your portfolio, and describe it a little bit?
Harold Rice Sure. Our Weatherization Group, which was the group that had the federal investigation, at that time, when I first came on board, they were about 21 million in size. The largest in the US. We were losing over about a million to a million and a half a year. I came in to bring in the right leadership, of which John Patty, my Director, is one of them. Retained the talent that had institutional knowledge and the desire. The majority of them were trying to jump ship. Again, we had the one on one conversations. They took a chance on my leadership. I didn’t beg them to stay. They wanted to make a difference.
We purposely and planfully went from about 21 million, cut back to about 10 million in size, to really make sure that we knew what we were doing and to fix the areas that were broken. Now, we’re about 17 million now. We’re growing back at a pretty rapid rate.
The Weatherization Group, out of the total budget for this organization, is the third largest department. Our first largest is the, and they’re all considered the Energy Department, which is LIHEAP. A lot of folks know us from LIHEAP. That is about 120 million, in volume. The next largest area would be our WIC, Women, Infant, and Children.
Speaker 1 Okay. LIHEAP is Low Income … ?
Harold Rice Low Income Home Energy Assistance Program.
Speaker 1 Okay.
Harold Rice We will go in, all of this is income based, for low income individuals, seniors that are low income, we will provide utility supplemental payments for them.
Speaker 1 Okay. People when they’re getting hit by their heat bills, and they think, people’s gas or [inaudible 00:07:27] is helping them out, usually it’s funneled through you guys?
Harold Rice Yes. Oh, yes.
Speaker 1 Okay.
Harold Rice It’s kind of an interesting relationship with the utility companies. There’s the federal funds, that come out of Washington. That comes directly to CEDA and then to the individuals. Then, there’s the supplemental funds, which every time someone pays their utility bill, if you look at your bill, about 47 cents comes out of that to replenish the supplemental fund. About half of that comes to CEDA.
Speaker 1 That’s a line item tax that just goes directly to this program?
Harold Rice Yes. That’s about 20% of our volume.
Speaker 1 Man. I cannot stop thinking about three and half years, you’re in Illinois. We’ve got problem after problem with state funding support, the federal government is shrunk, and you’re still growing. You took on a challenge.
Harold Rice It wasn’t easy. I appreciate that observation. Actually, the first year of my tenure here, I had the 40 million dollars of dept and the net assets of -3.5 million, and two million of lawsuit. Within that first year, 95% of that 40 million was gone. Net assets reversed. We had about an eight million dollar swing. Our net assets, which is kind of where it’s floating around now, a little bit higher, 5.1 million. All of the HR lawsuits, the two million dollars of lawsuits, were settled for a fraction of the cost.
Speaker 1 Yeah.
Harold Rice After that first year, we were being kicked out of where our other location, because we were 1.1 million in arrears. We negotiated a different rate that we could afford. That was done. We had to sign an agreement, a contract, stating that we would be out by a certain date, with the agreement that we had somewhere to land. That’s how we wound up here, built this whole place out. It was a story behind how we got in here, for a fraction of the cost, because we were broke. We did not have any unrestricted, or any reserves, built up over time.
After that first year, I was breathing a sigh of relief. Our new governor doesn’t sign the bill. He vetoes the first bill. I had to lay off all of my employees. I think we were about two weeks away from shutting the doors.
Speaker 1 Wow.
Harold Rice We had about a handful of people, about 10 people, running the organization. Including self, in two weeks, that would be it. I called some friends that I knew worked for the governor, I didn’t know the governor personally, to have a meeting with them. I was, from what I was told, the only person he granted an interview. It was to talk to him about the impact of that decision. These were federal pass through funds, which he couldn’t use to fill the budget gap anyway.
Speaker 1 Right.
Harold Rice To restrict that, was harming a lot of the individuals that were already harmed. You were taking poverty and driving them deeper into poverty. With that conversation, got to know Governor Rauner pretty well. He signed the Bill: SB 2042, which was to continue, or to allow, the flow of federal pass through dollars. The state portion supplemental funds was still tied up to the state budget, and about three months later, through legislative action and support, we got that released. That restored us to full board.
Speaker 1 In my business, which is about eight years old, there’s been a couple times where … It’s never been like a Governor Rauner decision, but there’s decisions that are made higher up in the state, and it just immediately trickles down and effects everyone in my company. It’s humbling to realize, no matter how much you think you’re in control, you’re not.
Harold Rice No.
Speaker 1 I would love to of been a fly on that wall of that conversation you had with him, to hear the realization that something they probably were doing for political reasons, which was probably felt righteous on their part, to see the effects it had on real people.
Harold Rice There’s an old African proverb that espouse today and that is: “When two elephants fight, the grass gets trampled.” It was Madigan and Rauner battle.
Speaker 1 Yeah.
Harold Rice Individuals who are voiceless and powerless were getting caught up in that battle. Along with the fact that I had an employee who was, prior to the budget impasse, came to me and said, Mark said, “I have stage four cancer. I’ve been given a year to live, and I just want to let you know.” I was like, wow. I have another employee who is still with me. She has an autoimmune disease, a very serious one, where it attacks her internal organs. Her medication, with insurance, was 700 to 1000 dollars a month. I had to lay both of them off. That just tore me apart.
Speaker 1 Yeah.
Harold Rice Mark lived for an additional year, but even when I had CBS interview him, he made the statement that he’s the only sole income provider for his family. He now has to make a decision, either chemo treatments or feed his family. I’ve made the decision to feed my family. I was happy to get those funds restored for him. I was happy to get the funds restored for my other employee, who went without her medication because she was laid off. That was really a driving force to talk to Governor Rauner. I shared those stories with him.
Speaker 1 One thing I keep thinking about as you describe your … I’ve never been very strong on the financials within my own company. I’m starting to get better. I started learning every day. Every year I learn a new term and how it helps. It sounds like you’ve had years of experience being comfortable with these terms and how you run. Tell me about some of your background, where you were before CEDA.
Harold Rice Prior to CEDA, I had a couple of small businesses. The largest one that really kick started, or really spurred my financial awareness, was owning and operating a number of McDonald’s restaurants. I had the dubious honor of being given stores that were being shut down to do turn arounds. Out of the seven restaurants, six of them were turn around situations.
Speaker 1 Cool.
Harold Rice You better know finances and numbers real quick. I always say, “Figures don’t lie, but liars do figure.” The answer is somewhere in the weeds. Understanding, not only what the numbers say, but how did you get to that decision. I always say, “Your PNL, your balance sheet, is nothing more than a report card on management decisions.” Once you understand what went into that number, whether it was nice number or a bad number, there was a decision behind it. It forced some other things.
As I shared with Governor Rauner, when I had that meeting with him, he asked a similar question. When I do turnarounds, what do I look at? I said, “I look at three things. Fiscal, operational, and the last, which is the toughest, culture.”
You can get the numbers right, you can get the operational piece right, but if you don’t get people working together, it all falls apart. Starts the dominoes.
McDonald’s in my early years, it was turning around organizations like that, and having to know the numbers part. After that, it was … Let’s see, I left McDonald’s, well, I was Chief Development Officer, but I had another business that I was part owner of. It was a nutraceutical firm, out of Salt Lake City, Utah, called Thorough’s Laboratory. They were in a fairly similar situation. They were a young, start-up business and had bad leadership. I came in and, initially as an investor, once I saw my investment dwindling, the board asked me to come in and help turn it around, which I did, and then got out of it.
Speaker 1 That’s cool. You and I were talking a little bit before the podcast about McDonald’s, who my company now works a lot with, and we’ve got some common friends that we’ve bumped into a few times. Yesterday, in fact, I got a call from one of the franchise owners that we’ve worked with for a couple years. He said, “I bought two stores. Go take a look at them. I want you to do these three things that we did together.” He had kind of a playbook in mind.
It was interesting. I had the thought yesterday that all these employees probably just got a new boss. Right. They don’t fire everyone and then hire all new people. Right. It felt like there was a little bit of transition going on, in the culture. I remember thinking, the communication wasn’t there, things weren’t there. I could see how that … I would of loved to of been a fry guy, I guess, at one of your restaurants, during the turnover. Who drives the culture in a restaurant like that?
Harold Rice I always say, you look at any organization, if it runs like crap, it’s leadership. It is the person at the top. They are the ones, the shot callers.
Speaker 1 Yeah.
Harold Rice You can’t blame it on the employee that doesn’t show up. You can’t blame it on a piece of equipment that doesn’t work real well. It’s the leadership. It gets back to that person who bears the title, President, or CEO, or COO. That’s where it all starts.
Speaker 1 Yeah.
Harold Rice That’s where the buck stops. It’s a tough job, because you have to set a culture. My culture, when I turned over the McDonald’s, it was different from the previous owner. I had a very involved family culture. Some owners were very dictatorial and autocratic. Some were successful with that leadership style. That was not a culture that worked for me. I’m a very engaging individual. Even now, I believe in management by wandering around, getting to know my employees, making sure that they understand. I believe you inspect what you expect. If they don’t know what you want, if it’s left up to them to come up with how the place should run, you’re going to get a hodgepodge. Like Forrest Gump would say, “It’s like a box of chocolates.” Just never know what you’re going to get day in and day out.
Speaker 1 Yeah. That’s one of the things I struggle with personally, a lot, is, you know, I was a firefighter before this. I didn’t get an MBA. I don’t have a lot of management experience. I struggle with letting people know what my expectations are and what I want, because I’m very hands off. I just don’t have the attention span to really describe everything I want and how it should be done. I become a very hands off boss, which is good in some ways.
Harold Rice Yep.
Speaker 1 Whenever I interview employees, I always ask, “What do you look for in a boss?” Everyone says the same thing. “We want someone who lets you have space and doesn’t micromanage.” Which I think, I flirt on the edge of just not paying attention, which isn’t good either. I appreciate where you’re coming from.
Harold Rice I’ll tell you, every employee, whether they say it or not say it, they want direction. They want to know what are they do to.
Speaker 1 Yeah.
Harold Rice If not, they’ll make something up.
Speaker 1 Yeah. It’s tough. It’s a fine line to walk.
Harold Rice Right.
Speaker 1 I find doing these podcasts. I think we were talking about why I do this. Part of it’s just talking to people like you so I can be better. That’s something I’ll take away from this. I appreciate that.
Harold Rice Great.
Speaker 1 We kind of already talked a little bit about the most challenging time. I think we’ve got that covered. What would you say your favorite parts are of being the CEO or President of an organization like this?
Harold Rice I’ll tell you, first and foremost, is watching people grow. It’s taking a dysfunctional organization and the folks that work within it, struggle within it, and then watching them become more than what they thought they could be, and watching them aspire to be more. Sometimes you just, I think it was Steve Jobs that said, “You hire the right people, and you get out of their way.” To watch individuals take charge and find out that they got this. Not only do they have it, they can do more. I get really pumped, because the residual of that is that the organization grows and benefits from it.
That’s probably my biggest charge, outside of making sure that the organization is sustainable to do what the mission says you want to do. You don’t get any of that done without the person doing the job.
Speaker 1 Yeah.
Harold Rice I came out of engineering. I remember years ago when I did R&D work in solar energy. I remember at 3M, we had the press out there. We had everybody looking at this great home, it was a sample home, that we had built. Air condition and heated off of solar energy. The engineers, we were kind of left out of it. Marketing took over. They were ready to kick it off. Lights, camera, then no action. No one could figure out what was going wrong, what happened. Turned out the one guy just didn’t flip the switch. He wasn’t motivated to flip the switch, because he wasn’t a part of the process. His answer was, “They didn’t talk to me. They didn’t tell me …” He wasn’t being malicious about it, but he wasn’t included.
Speaker 1 Yeah.
Harold Rice Again, it gets back to, that one person that has to flip the switch.
Speaker 1 Yeah. I just read this book by a Navy captain of a ship. I’m blanking on his name. It’s about … “Turn The Ship Around”, I think, is the name of the book. It’s about a Navy Submarine Captain who comes in and does a turnaround like you talk about. He’s got one specific example of during some changeover, I think it was of the nuclear weapons, I can’t remember. It was some pretty important change over. One of the guys hit the wrong switch. He talks a lot about employees feeling engaged, how to engage them, and also, to feel empowered, to be conscious in thought about what they’re doing.
It sounds like you got to hit a lot of different check marks on someone to make them engaged, do the right thing, and also participate, fully, in what they’re doing. Be able to set up and say, “Hey guys, I got to hit the switch tomorrow, or we’re not gonna-
Harold Rice Right! Right!
Speaker 1 You know? It’s easier said than done. I’ve been in my own professional career, I’ve definitely been, at times, where I was checked out. You say it enough times, “Hey guys, I got to hit the switch tomorrow.” Enough people tell you to not worry about it, you stop worrying about it.
Harold Rice Yeah. Yeah. It borderlines on micromanaging. I’m not a micro-manager, but I want folks to understand, here’s the plan. It’s an overall plan for the organization, but this is where you fit in. Your part is a very important part, because if you don’t do your part, the plan doesn’t really work that well. I believe in making sure that my maintenance guy, even though he cannot articulate the whole strategic plan, but if you sat down with him, he could tell you, to boredom, what his role is. Day in and day out. That fits in with another piece.
Again, I’m there to … I believe in, you can support negative behavior or you can support positive behavior. The choice is yours as leader. I used, even in my McDonald’s, when I would walk around, I would tell people, “Come into my office.” I’d have to talk to them. Of course, they’re all jittery. They say, “Well, what did I do wrong?” I say, “What makes you think you did something wrong? I’m here to tell you what you did right.” They walk out of there on fire. Of course, they’re telling other employees. It’s contagious. I believe in catching people in doing something right, to reinforce that positive behavior.
Speaker 1 Cool. Last question I always like to ask people is, you’ve known me, and this is just my personal passion and sustainability. It’s what I’ve been doing, on the side, for 30 years, and what I’m doing professionally for the last 10. How do you make sustainability a priority at CEDA? Not just, ’cause you guys do obviously important weatherization work, and other initiatives I know that you’ve guys got externally. How do you make it a priority within your internal organization?
Harold Rice First of all, again, it gets back to, making sure that everyone understands the plan and how they fit in. I always say the foundation to any organization are the folks, your people. You have to invest in them, in some form or fashion. If you’re not, someone else will, and they leave. They may have that institutional knowledge. The overall goal, like in our particular situation, being the third largest private, non-profit in the United States, we’re here to stamp out poverty. We’re also here to not sit on our laurels. We’re here to come up with creative ways to eliminate poverty and engage people and help people to a point of self-sufficiency.
I mentioned earlier that we’re engaged in solar energy for low income individuals. That includes a lot of things. One, it helps lower the energy costs of wherever they’re living, in an apartment or a home. We’re using it also as a job creation piece, as well. We want to hire individuals from the neighborhood. First train them, and then hire them, to make sure that they have a livable income.
Sustainability is more than just bringing in the money. That’s part of my job, is to be in Washington, DC and Springfield, and make sure the funds are still flowing. The other part of sustainability is having … In McDonald’s we call it, aces in their places. Making sure we have the right people in the right place. They know what they’re supposed to do. They understand the plan. If we fail, we fail quickly. We celebrate that and move forward.
Sustainability has a lot of different pieces. It’s not always being successful. It’s learning from the failures, as well, to be successful. I was telling my son’s wrestling coach, “Practice doesn’t make perfect.” He looked at me, and I said, “Practice makes progress and consistent progress makes perfect.”
Speaker 1 It’s been a pleasure. I was at your offices, must of been about three years ago, it’s like a transformed space. The light in the space. The feeling about it. Congrats on the first three and half years. Here’s to another 10.
Harold Rice Thank you, man. Likewise to you. Thank you, very much.
Speaker 1 Thanks for catching up. We’ll look forward to again soon, Harold.
On Jan 23, 2018, Tim Frick and Jamie Johnson sat down in the offices of Mightybytes to discuss running a social enterprise – a firm focused on more than just generating profit. Mighybytes is a B-Corp and an Illinois Benefit corporation, while Verde is an L3C entity.
Mightbytes focuses on providing small business IT services, focused on digital marketing, strategy, design, implementation, and optimization of online brands. Tim discusses the environmental costs of our increased usage of computers and cell phones, as well as the environmental implications of storage of those sites, images, and apps.
Read the full transcript below
Host Welcome back to episode 10 of the Verde Podcast. Every week, we talk to local business leaders and entrepreneurs to understand the real story that doesn’t make it to the spotlight, but is how actual businesses are actually built here in Chicago. Today, we have Tim Frick, who is the owner and CEO of Mightybytes. I’ve been able to follow Tim for a couple years. He’s quite a leader in the Ravenswood community as well as the social enterprise community in Chicago, so welcome, Tim.
Tim Frick Thank you very much. Appreciate it.
Host Tim, tell me a little bit about Mightybytes, specifically. We’ll dig a little bit into B Corp thing, but tell me about Mightybytes, what year you started it, what drove you to build your own business.
Tim Frick Sure. We started 20 years ago this month, actually.
Tim Frick It was a different internet back then and different digital agencies. It was completely different. In fact, we’ve seen several significant shifts over the 20 years that we’ve been in business and the kinds of business that we do, the kind of things clients are looking for and such. I started the business to do meaningful work for meaningful organizations. Since the beginning, we’ve focused a lot on education. Social enterprise wasn’t really a word back then, but we did do a lot of work for non-profits. That has kind of grown and evolved over the years as well. Once we became a B Corp in 2011, we went kind of all-in on that stuff and that’s been a whole interesting evolution of the company.
Host Who were your early clients? Who were your first couple clients and what kind of projects did you work on for them?
Tim Frick Sure. Our first project was actually an interactive game for a toy company called Learning Curve Toys. It was an educational game similar to that game Perfection where you push the plunger down and you have to put all of the pieces in in a certain amount of time. It was kind of like a virtual version of that. We did a lot of motion graphics and kind of interactive media. Back then, it was flashing director and some DVD-ROM authoring and such, but that kind of evolved over the years to content management systems and telling better stories online.
Then we got more complex with software development and we’ve done a number of exhibits for museums around the Chicagoland area. That about kind of sums up. Now, I’d say we work in four different service areas. We do a lot of strategy consulting, so helping our customers kind of align their digital marketing channels. We do a lot of design in UX and a lot of web and software development as well as digital marketing and optimization. The work that we do falls in those four categories and oftentimes, our customers kind of go through that life cycle from one to the next to the next to the next.
Host That’s nice for recurring revenue.
Tim Frick Yeah. I think having that kind of larger, kind of omnichannel bigger picture approach to things really helps our clients how to make sense of all of things that they’re doing in the digital realm.
Host Well, I’m sure spending time and figuring out the strategy first actually helps the process [inaudible 00:03:20] go smoother and much faster and better for you as the contractor as well.
Tim Frick Absolutely, although we do make sure that we focus not too much on trying to flesh everything out up front. Like many agencies, we evolved years ago from waterfall to kind of more Agile-based practices. We do a lot of iterations. We’ll come up with a bunch of hypotheses on what we think will work up front and then we’ll prove or disprove those hypotheses over time using these various kind of disciplines.
Host Before my company evolved to what it is, we had a iPad app and an API that showed energy savings. I didn’t know it at the time and I’m definitely an Agile person. I would never work well on Waterfall, mostly because I’m just not organized enough to be.
Tim Frick Absolutely. It’s so much more of a better way to work. In fact, we’ve kind of taken what originally was more of a software development and then slowly evolved to a project management process. Now we kind of apply that process to everything and consider ourselves … We really focus on organizational agility internally so that we’re okay with making mistakes as long as we’re learning from them and, of course, correcting as we go along.
Host It’s funny. I can hear someone else talking about their business and I can quickly think, “Well, if you apply Agile principles, this would be so easy to solve,” but then in my own company, I never do it. I should and I talk about it and I think about it, but when it comes to application sometimes it’s helpful to have someone from the outside looking in.
Tim Frick Oh, for sure. That level of objectivity is definitely necessary when you’re trying to do this kind of stuff using Agile methods.
Host I assume it was just you, but who started the company?
Tim Frick It was just me. I was a freelancer working out of my back bedroom and got really busy. I was lucky enough to have some really cool clients right from the get go, and over time, built the company based on that. I went to art school. I got a bachelors in writing and film studies and a masters in film studies from Columbia here in town, so Mightybytes has been my business education. I really made lots of mistakes over the years, but have learned from all of them and didn’t have a clue at the beginning, especially about how kind of run a business.
Tim Frick I think running a business is a lifelong learning opportunity for pretty much anyone who does it.
Host I went to grad school and studied environmental policy and I some ways am envious of people who have MBAs because they study how to run a business, but I’ve never met someone who said that it truly prepared them for running a business.
Tim Frick Right, right. Exactly. “I figured it out on day one.”
Host Give me, just for people that don’t know Mightybytes, kind of a idea of what you guys are like today, how many employees, and-
Tim Frick We’re seven people plus a handful of contractors and freelancers that we work with based on our workflow expanding and receding. That’s pretty common in the digital agency world. We do a lot of small projects as well as a lot of large projects. We have a bunch of long-term, ongoing retainer clients.
Host How many customers in general in 2017?
Tim Frick That’s a good question. We just closed out the year’s work. I can tell you the numbers. I’m not sure exactly how many customers that we worked with, definitely two dozen at least over the time, but some of ’em, like I said, small, little things that we just help them with. We do hosting and website maintenance for our clients, so a lot of them have just small contracts with us. Some of ’em, we do SEO work over time, so we have a lot of kind of ongoing recurring revenue and then we have a couple, like I said, larger clients.
Host Do you have a rule of thumb where you try to spread out the work, where you make sure one customer doesn’t become too large of a-
Tim Frick Absolutely. Yeah, I made that mistake early on. We were working with a large tech company, one of the Bell companies in the late ’90s when we first opened and they were the majority of our work. Then they were like, “Oh. Well, we’re not going to work with you anymore,” and that was a really tough lesson to learn, and so I’ve really tried to diversify our client based in as much as I can without losing our soul. We want to stay focused on a specific kind of work if possible, so I try to keep it diverse and I also try to diversify the income stream. We do project work, but we also do monthly retainer work and stuff like that definitely helps with the peaks and valleys of cash flow.
Host Which come with any business.
Tim Frick Absolutely. For sure. For sure.
Host You talked about the client focus and who you go after. Tell me a little bit about the benefit corporation and the B Corp, which you are both. Describe that for people who don’t know that as well as how it applies to your business.
Tim Frick Totally. As I mentioned earlier, we have been working with mission-aligned and mission-driven organizations since the beginning. Education has played a huge part of that. A lot of the stuff that we do has an educational component to it. We have always been sustainability focused. I’ve always been an avid environmentalist. We’re down in Ravenswood now, but when we were up in Andersonville, we were members of the Chamber of Commerce there. They had an eco certification that we went through and we got a three out of four stars for our certification. That was kind of the gateway drug for me to becoming a B Corp because it kind of opened my eyes about it’s not just about recycling or changing out light bulbs. There’s a much larger thing there.
I learned about B Corp certification on a climate ride in 2010 and I was fascinated by it. At the time, apps were all the rage and stuff and we had been doing some internal brainstorming on what that might look like for us. We realized all of the ideas that our team were coming up with had some sort of mission focus, some sort of good cause, were driven by altruism and education and stuff. We were thinking, “Well, how do we walk the walk and actually draw a line in the sand to say, ‘This is what we stand for’?” We’re a for-profit company. We want to be for-profit. The more profit we make, the more we’re able to align that profit with better purpose and offer better benefits to our employees and all that kind of stuff, be a better community player, corporate citizen, et cetera.
The L3C, which you mentioned your company is, I looked at it. That was the first thing that we looked at. We were intrigued by the idea of being able to get grants and stuff like that, which as a corporation, you can’t get. Then the B Corp certification came along and when I learned more about it, I was like, “That’s the thing.” We went through the certification process, which can be pretty challenging and arduous, for the first time in 2011. We just finished our fourth re-certification in the fourth quarter of last year, scored highest ever. We finally cracked the 100-point mark, which is no easy feat. Then in January of 2013, the state of Illinois passed benefit corporation legislation, so the B Corp is a certification similar to Good Housekeeping has a certification or Fair Trade has a certification. You go through a process. It’s an audit of your processes and you fill that out and you get a score based on how you perform and then you use that as a benchmarking tool to improve over the years.
The benefit corporation legislation allows you to change the legal structure so that you actually can make sure that align purpose and profit alongside each other in the way that your business runs legally. As a benefit corporation, we are legally required to provide some sort of societal benefit alongside the standard corporate edict of earning and generating profit. We changed that up every year. We kind of evolved those processes and what that means to us as a company and then we produce a report every year that says, “This is the benefit that we provided to society alongside pursuing profit.”
Host How many benefit corporations are there in Illinois?
Tim Frick That’s a good question. Last I checked, which I think was last year, there were over 50. That’s a little bit harder to track. You can go to bcorporation.net and actually track how many certified B Corps there are. They have a search engine and you can actually see. There’s about 2,500 or so B Corps right now around the world, over 50% of which are in other countries, but benefit corporations, you’d have to go to the individual states who passed the legislation and look at the Secretary of State’s listing.
Host I started a company in 2010 and I was very excited about the L3C concept, how it kind of ties in a mission to your revenue. Still, to this day, every dollar of revenue my company generates goes toward reducing energy, so the L3C concept kind of petered off in its ability to kind of excite the marketplace. I think the IRS never really ruled in a way that made it recognized, so it’s good to see that the same kind of theory of mission-focused, but still for-profit, because I totally agree with you. I love nonprofits. I like hearing what they do, but there are some things that I think for-profits can do better.
Tim Frick And there’s opportunities in both sectors for us to learn from each other. I love being in this kind of hybrid fourth sector where we can learn a lot about how to run with more of a conscience from nonprofits, but nonprofits can also learn a lot from for-profit companies about how to run as a better business. It’s a really great opportunity to share a lot of knowledge.
Host What are some of your favorite parts about running Mightybytes? What do you wake up in the morning, first thing that you’re thinking about and ready to go?
Tim Frick Sure. I mean, it’s always a balancing act. It’s a really competitive industry. There are over 560,000 agencies around the world that do some variation of what we do. Some of them could be just specifically on blogging or copywriting or content. Some could be specifically focused on web development, but that’s a lot of companies who do what we do around the country and having been around a long time, we have amassed a lot of experience. It’s tough to compete. Business development is always a challenge, but I also really love the variety of it and the fact that we have taken much of our 20 years and focused it on finding really good clients and I’m very proud of our portfolio. Being able to do ongoing work that really literally changes the world, I’m very proud of that and that’s really exciting.
We’re one of the few agencies that apply sustainability principles to the process of creating digital products and services. When we became a B Corp, each company gets to define what that means for them, and we were like, “Well, as an environmentalist, we’d like to be able to figure out how we can be a better, more environmentally friendly company.” Right around the same time, I was learning about the environmental impact of the internet, which is massive. I mean, it’s more than the airline industry and at the time I was learning about it, it was about a billion tons annually of CO2 emissions. I was kind of floored by this because I was like, “Well, wait. That’s what I create every day for a living, and so how can I reduce our impact?” We went on a long mission to find really good green hosting. Ironically, we were trying to find either other B Corps or a lot of smaller companies to support. We ended up landing on Google Cloud platform because, of the companies that are around, they are super green-focused and really impressive. It’s also a very scalable and expandable solution for our clients.
Then we started kind of doing standard kind of lifecycle assessment efficiency processes on our own process, figuring out, “How can we make sure that what we built is optimized, efficient, and powered by renewable energy?” We’ve been working on that since about 2012. We created a free tool called Ecograder, which is at ecograder.com. People can put their URL in and they can crawl and find out whether or not their site is kind of sustainably focused.
Host Cool. I didn’t know that.
Tim Frick Yeah, so it uses the green hosting, web hosting database and kind of cross=references whether you have green hosting and then identifies a bunch of things in the area of UX and content and findability for performance optimization for efficiency and such. We created that. We created a microsite called sustainablewebdesign.org. I wrote a book called “Designing for Sustainability,” so it’s really become part of the philosophy that guides Mightybytes’ mission.
Host Do you find that that draws in a lot of customers, that focus?
Tim Frick I think not as much. I think people appreciate that we do that. I think there’s a lot of people in business who are still like, “Oh, it’s green. How much extra does it cost?” We get a little bit of a side-eye every now and again. Our clients really appreciate the green hosting thing, but they also really love the efficiency thing. They also are like, “Oh, you mean my site’s going to run faster? It’s going to be friendlier for users? People are going to be able to find things faster? That’s awesome. I’m all about that.” We don’t typically lead with, “You have a green website.” We more lead with, “You have a really optimized, efficient website that is going to be better for your users and better for your company’s bottom line and thus more sustainable for the long haul.
Host Five, six years ago when I … I’ve switched a bunch of URLs over the years and I’d custom built our website and hosted it at A Small Orange because they had-
Tim Frick Yeah, we work with them.
Host To this day, everything is slow, so I don’t know that they’re very good at what they do, but their green focus got me.
Tim Frick What we struggled with was a lot of the smaller green hosting providers, especially since we do work for some larger organizations like YMCA and Allstate and a few other larger companies, it’s hard to go with a smaller provider. A lot of them, while the commitment to renewable energy is certainly admirable, there’s not necessarily a hand-in-hand approach to customer service and reliability, and so we would have websites go down a lot. We would have to be waiting with some of them. Some of the green hosts we worked with, we’d be waiting significant periods of time to try to get answers as to why certain things were happening with their website and our clients would be like, “Absolutely not. No way.”
Host The thing you have to do is keep that side happy.
Tim Frick Exactly, so that was ultimately why we ended up going with Google Cloud platform. As much as I love supporting small businesses and especially other B Corps, we just wanted to make sure that we were covered in terms of reliability and customer service.
Host They’re 100% covered by Google?
Tim Frick Yeah. The company went 100% in 2017.
Host That’s pretty incredible.
Tim Frick For a company that size, I’ll take it. For sure.
Host For sure. Just to stay focused on that, do you have any thoughts about Bitcoin mining and [crosstalk 00:18:21]?
Tim Frick Yeah. I’ve heard a bunch of different things that a single Bitcoin transaction uses as much energy as your house in a week and every time new Bitcoins are released, they use up as much energy as the country of Iceland. There’s a whole bunch of things out there that are bad.
Host Those can’t be factual, right?
Tim Frick I mean, a couple of ’em are from factual resources like Guardian and Fast Company and stuff like that, but we haven’t really cracked that nut in terms of how it impacts our own work yet. I think blockchain in general offers a lot of opportunity for sustainability because of its transparency, but I do think if it is indeed using as much energy as people are purporting that it is, something’s got to be addressed there before it explodes or before it gets much larger.
Host Well, and I’m sure that creating a penny with copper or whatever isn’t exactly environmentally safe either.
Tim Frick Right. For sure.
Host I’m sure it takes careful analysis, but definitely the buzz right now is that it’s a [inaudible 00:19:26] currency, which is crazy.
Tim Frick Which is crazy, yeah. I think overall, the biggest eyeopener for me in the last 8 to 10 years has been that we’ve been brainwashed in the digital age to think that, “Digital is better. Digital is more sustainable. Digital is greener. It replaces paper. Why wouldn’t it be?” All this kind of stuff and so much of the research is showing that in certain cases, it’s actually not better. We really put as much effort as we can as a small company into trying to figure out how to be as sustainable as possible in all of our practices, right down to buying pens for our design labs, markers for our design lab that have soy-based replaceable ink cartridges and stuff like that. We kind of put that philosophy across the business.
Host That’s good to hear. It’s good to hear this reflected from everyone I know who talks about you, they’ve always shared that anecdotally, that you’re pretty-
Tim Frick Those environmental nerds.
Host Well, it’s not greenwashing. You don’t just talk about it. You do it and you live it. I think that’s-
Tim Frick Oh yeah, and it can be tough and a struggle. It can be a lot of extra work depending on what it is that you’re trying to do, but to me, if we have a better system or sustainable feature for our planet, I’m all about that.
Host You said 20 years?
Tim Frick Yup.
Host In 20 years, do you have a particular time that is most challenging in running Mightybytes?
Tim Frick There have been a number of them. Right after 9/11, I had 10 contractors I was working with and basically had to tell them I had no work. About February of 2002, I basically went down to myself, again, back to freelancing. We had some real struggles with the Illinois budget crisis in 2016 because we do a lot of local work and so many of our clients were reliant on that money and the first thing that goes when nonprofit isn’t getting the money it’s used to is marketing projects. We had a real struggle with that and we had to do some kind of significant pivots in how we do things. We don’t typically reply RFPs anymore and there’s a number of things that we did over the course of the last couple years to do a pivot, but also keep our soul. 2017, we were 18 times more profitable than we were in 2015.
Host That’s awesome.
Tim Frick And even though 2015 was our highest grossing revenue ever, 2017 was short of that by one project, and yet we were much more profitable. That’s definitely some changes that we made for the better.
Host I totally agree with you on the RFP process. Whenever I’m bidding against somebody else, I feel like I’m just a cog. Someone wants to replace the lighting and they’re going to do it anyways. I’m just there to facilitate it. I much prefer to be an organization … I’m like you. I’m more drawn to business development and sales as the owner of a company. I like to go out and educate someone who they weren’t thinking about this, but here’s why and here’s why this’ll-
Tim Frick For sure.
Host Sell for a couple years. I totally agree. RFPs just are … You’re always a year late to that [crosstalk 00:22:37].
Tim Frick In so many levels, it’s a race to the bottom. I mean, if the person issuing them is making a choice solely based on price, someone like my company’s never going to be able to compete on price because we’re 20 years old. We have a ton of experience. We’re not the cheapest thing on the market. We’re not the most expensive either because we’re a small company, but we don’t want to compete on price. We don’t want to do the cheapest job out there. Then there’s also, kind of going back to what you were talking about earlier, an RFP necessitates that you do all this [specing 00:23:08] up front and that you do all of this work upfront that ultimately, you end up throwing away when you start doing continuous learning and Agile practices.
You learn as the project goes along and you’re like, “Oh, well that didn’t work.” It’s just this huge waste of time and on top of that money, too. There’s a guy out of Canada who said that Canada alone estimates that they waste $5 billion a year on responding to RFPs. Companies spend that amount of time responding to RFPs and so they waste $5 billion of their gross national product every year just responding to RFPs. That’s a lot.
Host I see the point why some organizations need to have multiple bids and to get a good idea, but personally, I don’t. We hired a marketing firm last year, it’s called TackleBox, to do kind of a brand manifesto for us. Once I met them and it made sense to us, I didn’t need to shop around. We got to a price that worked and we scaled back the project to where it fit for us, but I don’t even know … I mean, I see the point of RFPs-
Tim Frick For sure.
Host But I couldn’t imagine doing it.
Tim Frick I think the biggest challenge there, at least in what I’ve seen, is with nonprofits because so many … they do RFPs because they’re grant-driven and the grant is a finite amount of money, which kind of necessitates a project fee. What happens is that puts this knee-jerk reaction on behalf of the nonprofit to cram as much as they can possibly cram into that project for the amount of money that they have without, possibly, testing it first. They’ll throw a bunch of features at something and then you launch and it’s like, “Oh. Well, guess what? Half of those things don’t work or the users actually don’t want that. They want this other thing,” and yet the agencies may try to coerce them or help them to kind of better understand a better way of doing things, but if you’re contractually obligated by what you responded to in an RFP, which was all the way upfront, it can be potentially lose-lose.
Host I totally agree. The last question I always ask people is about how you … We’ve talked already a lot about this, but making sustainability a priority within your business. We’ve already talked a little bit about this, but I’m curious. You come from Michigan, right? In the UP?
Tim Frick Yup, indeed.
Host What was it growing up in the UP that drove that into you as a priority?
Tim Frick Proximity to nature. I mean, honestly, that is it through and through. I grew up in the woods. I grew up on a lake in a tiny town in upper Michigan. As much as I didn’t appreciate it growing up, once I turned 18 and was ready to go off to college, I was like, “See ya. I’m out of here,” and wanted to be around urban culture and be in cities and all of that kind of stuff, but it didn’t take too long for me to realize, “Oh, I appreciate cities that have proximity or access to nature.” Chicago’s got a really amazing lakefront, obviously, and a really amazing set of forest preserves and stuff, but to be in big nature, you have to drive for a while. You have to get way out to be in a place where you’re in a lot of nature and I really appreciate that.
I just have always had a kind of conservationist mindset about that kind of stuff and as I became more and more educated on the role business has played in environmental issues over the years, I just became more and more passionate about that and more and more passionate about making sure that I’m not part of the problem, that I’m part of the solution. That was one of the things that seemed B Corp certification and having this benchmarking tool for building a better business, I was like, “The light bulb is on.” I was like, “That. That’s the thing that makes sense and that’s what’s going to fix us.”
Host I would say I don’t find it common, but it’s nice when you’re running a business and occasionally you catch that moment of clarity or connection to something else.
Tim Frick Totally. Absolutely.
Host Well, Tim, we’ve never really gotten a chance to talk much. I’ve known you for a long time superficially and through other people, but I was impressed and I’m glad to have connected.
Tim Frick Awesome. Thank you. Thank you very much for the chat and the talk. Appreciate it.
A ComEd Smart Thermostat Rebate exists for one reason in Illinois – programmable and smart thermostats save energy. The Comed Nest Rebate, Comed Ecobee Rebate, and other smart thermostat rebates can help you explore this new technology. Since 2007, Illinois has been offering ComEd energy efficiency rebates and incentives to help encourage folks to make smart choices. They want to encourage us to make equipment upgrades that save energy.
Since smart thermostats have become popular in 2016 and 2017, we will focus on those thermostats in this article. However, programmable thermostats do save energy and are eligible for a ComEd thermostat rebate. They just don’t save as much as smart thermostats.
How Do Smart Thermostats Save Money?
Smart thermostats basically save energy by acting like highly intelligent programmable thermostats. In addition, they can accept as many programs as you can think of, for any day of the week. Many of the programmable thermostats only allow a 5-2 program. This means you can set a schedule for Monday through Friday, as well as the weekend.
Setting back the temperature at night is a major way to save money, both on heating and cooling. Not just when on vacation, but even just for the 8 hours that your home or business is basically unoccupied. In fact, Energy Star states that you can save 10% by setting back the temperature 7 – 10 degrees for 8 hours at a time. With a Smart or Comed Nest rebate in Illinois, you can get an energy-efficient thermostat at a lower price.
How Much Do Smart Thermostats Cost?
Smart thermostats basically cost $160 to $400, depending on the model. Whether you are looking for a basic home unit or an advanced commercial unit, there are options. After ComEd energy efficiency rebates, the cost can be as little as $60 for a home unit (not including installation) or $75 for a commercial unit (including installation). Installation can typically be done by the homeowner or business owner unless you have complicated rooftop HVAC units. Don’t be afraid to try yourself (on a mild day), and don’t feel bad if you need to get help. Each unit is different and I’ve seen even the best HVAC technician’s get stumped on what appear to be straightforward installations. As long as it isn’t December and freezing outside, it is worth giving a shot for yourself.
Can I Get a ComEd Smart Thermostat Rebate and a Gas Utility Rebate on the Same Thermostat?
For residential, the answer is no in 2018. In the past, there were combined Nest rebates in Illinois from People’s Gas, North Shore Gas, and Nicor Gas. However, since the ComEd incentive is $100, this is really all you need to offset the cost of a smart thermostat if you don’t require professional installation. Verde offers residential Nest and Smart thermostat installations for $99, but only if you need us.
For commercial customers in 2018, you are eligible for a combined $300 incentive for 0-100kW rated electric customers, as well as a $100 People’s Gas Incentive or $100 North Shore Gas incentive. While the unit installed must be the ComEd Ecobee EMS Si with zigbee enabled capacity (a top of the line thermostat) – Verde offers this unit with installation and a 3 year warranty for $75 to businesses in People’s Gas and North Shore Gas territories. For businesses in Nicor territory, Verde offers the ComEd Ecobee EMS Si for $175, as there currently is not a commercial Nicor Gas incentive for smart thermostats.
Can I Receive the ComEd Nest Rebate in Illinois if I Currently Have a Programmable Thermostat?
As of 2020, you are now able to claim a Comed Incentive when replacing a programmable thermostat. For smart thermostats replacing a programmable thermostat, your business may be eligible for $200. If your existing thermostat is a non-programmable thermostat, you would be eligible for a $250 incentive.
If your business has a split system for heating and cooling (furnace inside in a closet and air conditioning on the exterior roof or side of the building), then the Nest thermostat would be a good fit for you.
If you have a rooftop packaged HVAC system (heating and cooling are combined in one unit), then the answer depends. Modern rooftop units (RTUs) have advanced rooftop controls, which means that they have internal computerized systems that control their heating and cooling in complicated algorithms. They don’t just heat and cool, they heat and cool in different stages and with different levels of fan speed.
Nest can control up to two stages of heating and two stages of cooling. If your rooftop unit controls more than 2 stages of either, then the Nest is not a good fit.
Fans that move the air through your space can also sometimes have VFDs or variable frequency drives. Fans can run at two or three speeds, or even ramp from 0% up to 100% based on demand and usage. In this case, it depends. Nest would be the best point of contact through their technical support, or you can call the rooftop unit manufacture and ask them.
Our experience has been that it is better to call Nest first, but a good technician can help you determine this as well. Verde would be happy to provide a free commercial assessment to help you determine this, and we can install the Nest if you decide to move forward.
In Illinois, smart thermostats are hot. There are a lot of options to choose from, and there are great incentives from your local utilities due to the Future Energy Jobs Act that was passed in late 2016. Here is our opinion on the best smart thermostat for commercial and residential settings.
Smart thermostats save energy. Therefore they qualify for both rebates from the gas companies and the electric utility. Your electric utility is ComEd if you are in the Chicagoland region. There are just a few exceptions (Winnetka, St. Charles, and Naperville).
Best Smart Thermostat for Home
If you are looking for a smart thermostat for your home, you are eligible for a $100 instant discount through ComEd’s Marketplace. Our choice for home is the Nest 3rd Generation.
The 3rd Generation Nest is the easiest to install for a home owner. It is also super easy to hook up to your app and computer. This is key, as the easier to use means the best chance of getting the most savings out of the unit. Nest has a great data platform behind it. Google will let you know when you can try to save more energy with a little leaf on the platform. It also tracks your usage and sends you updates via email on how much energy you are using. There are also suggestions on you could do better.
The Nest connects with a bunch of other products. Tools like your Google Home and the Nest Protect system also act as an additional temperature and occupancy sensor. Additional integrations include Nest Hello and Nest Cam systems. The smart home is coming, whether you like it or not. Certainly Nest has an edge up on the product offerings that connect well with the Google.
Best Smart Thermostat for Business
Hands down, the best commercial smart thermostat on the market in 2019 is the Ecobee EMS Si. There are two simple reasons for this – access to stellar rebates from the utilities, as well as functionality.
The EMS Si has all of the same benefits of the residential smart thermostats. However, it is not quite as easy to install. It connects well to smartphones and has learning and occupancy benefits. Additionally, it can control the multi-phase heating and cooling that advanced HVAC systems tend to have in commercial applications.
In addition, the EMS Si has a power extender that can come optional. This extender can solve the common C wire issue. The C wire provides electricity to the thermostat, helping to charge the battery. If the C wire is lacking or not providing enough energy, the power extender can help resolve this common issue. Whereas other smart thermostats often lack a solution without running a C wire.
Available ComEd Rebates
For small to mid-sized businesses, you qualify for a $200 – $250 of smart thermostat incentives to install the EMS Si smart thermostat. You need to have it professionally installed, but that is recommended regardless for commercial application.
For larger businesses, you do not qualify for this incentive. However, the energy savings should be greater and justify a larger investment.
Available Gas Rebates
North Shore Gas and Peoples Gas offer an additional $100 incentive. This typically covers most businesses that are in Chicago. This can be combined with the $200-$250 for the ComEd Rebate program, and we can install these systems for $75 each thermostat after the combined incentives (including labor, material, and recycling).
Nicor Gas does not currently have any incentives for smart thermostats to combine with the ComEd rebate. However, keep on the lookout as that is always changing. They do offer a variety of other incentives for commercial properties.
How to Get My Smart Thermostat
If you are a residential homeowner and are on the hunt for a smart thermostat, you can pick one up now at the ComEd Marketplace and pay a reduced price without any hassle. Give the install a shot on your own, and if you need help – give us a call for a $99 installation.
In 2011, the Illinois legislature passed a law that will modernize our grid, called the Energy Infrastructure Modernization Act. This law set aside $2.6 billion to install smart meters throughout Illinois, both in residential and commercial applications. After five years, ComEd publicly states that it has avoided 7.6 million outages and generated $1.4 billion in societal savings.
Whether you agree with this or not, smart meters are here to stay.
Polar Vortex and Smart Thermostats?
The Zigbee enabled functionality of the EMS Si allows the utility to take control directly of the thermostat from the smart meter, which has a lot of societal benefits. This means that brownouts can be avoided, as the utility can preserve the integrity of the grid on days that are incredibly hot or cold (remember the polar vortex?).
At this time, the EMS Si is the only smart meter that has zigbee functionality, and therefore, the only smart thermostat that is eligible for the $300 of incentives in the Small Business Energy Savings program. While more expensive than any other smart thermostat on the market, the product has great functionality and after the incredible incentive, can be installed for as little as $75 when combined with the People’s Gas and North Shore Gas $100 rebate (note there is no Nicor incentive for business as of the time of this publication).
EMS Si Functionality
This commercial unit is able to control higher-end commercial units that can control multi-phase heating and cooling. It can also include a power extender, which can solve the common issue of a lack of power availability to a smart thermostat.
It can be used by a desktop or smartphone app, enabling control of the business heating and cooling from wherever the business owner is (think saving gas usage when lying on a beach in Tahiti).
The unit, like other smart thermostats, enables a high 7-day programmability, occupancy sensors, learning behaviors, as well as great warranty and easy operations.
Customer Satisfaction with the EMS Si
We have found a great deal of satisfaction from customers after installation of the Ecobee EMS Si, and continue to install it in 2018 after hundreds of installations in 2017. It can take some support from tech on your first few installations, but after the learning curve is a very easy product to install. There are some applications where the power extender will not work, such as in multiple rooftop RTUs at the same location. However, in general, it is a great product with great customer satisfaction in a very competitive market.
Due to the available $300 Small Business Energy Savings incentives, as well as the $100 People’s Gas and North Shore Gas incentives, the EMS Si is the best option for commercial installations in Illinois in 2018
In 2010, Verde Sustainable Solutions was created to change the way the world thinks about energy efficiency. What started as a one-person consulting firm, has evolved over the years to a 25 person team that is driven with a singular purpose of reducing energy usage in Chicagoland.
In 2017, we underwent a rebranding exercise with Tacklebox Brand Partners. We have rebranded ourselves to Verde Energy Efficiency Experts, as that is a better descriptor of who we are today. The product of that work is The Verde Manifesto, and you can read about that transparent process and see the entire work output of Tacklebox.
We have often been called Verde Solutions – which is not a bad name. However, I have often felt that resembles another strong presence in Chicago – Motorola Solutions. To me, the term solution is still very relevant for how to approach problems, but it is not a good name for a company. Or otherwise, the name is outdated.
Solutions can also be relevant for many ways of addressing issues – and is way too broad for what we do. We are a singularly focused company – we only reduce energy through energy efficiency.
iPad App – Verde
was the Verde iPad app, which is no longer available in the iTunes store. Our team does still use the technology internally, but it became difficult to maintain as energy efficiency products change so rapidly. We also found it difficult to monetize if success when it was free to download. One of my most proud days was when we ranked ahead of local Groupon in the number of downloads in April 2011 – they had a $5 billion dollar venture ba
Verde R&D – API
We had taken the data behind the iPad app and built out an API to share. The API was basically a way to share energy savings information with other websites, and the hope was that the data would help energy-efficient products have an edge over others if their savings were higher.
One of the key components of both the iPad app and API was the ability to find your location and find your energy rate, so your calculations could be accurate. After all, energy rates are highly variable in the United States, from the low rates of the Midwest to the incredibly high rates in Hawaii, California, and Connecticut. In fact, in January 2018, Illinois rates are $.10 per kWh for commercial customers, whereas Hawaii businesses pay $.30 per kWh – almost 3 times as much according to the EIA.
I had to learn a bit of MySQL coding to get this data into the system, which was fun. While this data is still so interesting, our business model is really focused on just the local Chicagoland area, which does not have as much fluctuation in energy rates.
We took the data a bit further, to demonstrate the instantaneous usage in a visual form that could communicate energy usage of particular products. This app showed a spinning wheel, which was super interesting and fun to code at that time. We built this app in a “hackathon” over the weekend with a graphic designer, backend developer, and myself. With little sleep, we had a great time and put a product out that didn’t make a lot of money, but hopefully added value to the world.
Perhaps Verde Solutions could be a more fitting term in the future if we begin offering solar panels for our commercial customers as planned in 2019. When that becomes a reality, we could perhaps spin off another arm called Verde Solar PV Experts. However, in 2018, we are only laser-focused on energy efficiency and will, therefore, be known as Verde Energy Efficiency Experts.
We have also been getting a lot of requests to bring our user-friendly iPad app back to the iTunes store. Keep an eye out for that in 2019 as well! Or call us and ask to be on our list for more information.
Often, those businesses are a Verde Company. This means, not only do they care about the environment and make sustainable choices, but that they make smart business decisions. They do things for the long term, and they are likely to be a business that you can attend for years to come.
Verde Energy Efficiency Window Cling
You may see this window cling on their front door – designating a Verde Certified Company.
Verde Company Rebrand
In case you notice a slight change in our name – we used to be referred to as Verde Sustainable Solutions. However, during a recent branding exercise in The Verde Manifesto, we have found that Verde Energy Efficiency Experts is a better description of how we help customers reduce energy exclusively. Sure we provide our customers with cool reusable bags, reusable waters bottles, as well as LED flashlights – but those are just part of our swag. We are singularly focused on not just recommended changes, but making them for our Chicagoland partners.
Care About a Local Company
Connect them with Verde Energy Efficiency Experts and we will make sure they are spending less money on energy, so they can spend more on their great service or product. Companies that spend less on energy are more likely to be around in the future.
In 2011, Verde Energy Efficiency Experts produced our first big product – an iPad app that was focused on energy savings information.
While we currently don’t just share recommendations, we make them – it is great to look back to see the solid platform that our data comes from. With over 8 years of experience in calculating energy efficiency savings, we have more experience on the data side than any competitor in the space.
Verde Energy Efficiency iPad App
We initially charged $4.99 for the iPad app and found some small downloads from industry professionals. After a brief promotion to make the iPad app free just prior to Earth Day, we had hundreds of thousands of downloads and some positive reviews from major industry experts, including CNET, TreeHugger, and LifeHacker.
In the end, our iPad app stayed free and we found it difficult to monetize this type of app. If you would like more information about how to access the information and data in the iPad app, please shoot us a note.
alt=”Verde Green Energy Download”>The iPad app starts with a clean download to your iPad, enabling you to walk through your business or home and enter all of the energy-using lights, appliances, heating and cooling equipment, etc.
Verde Energy Rates
Our app is founded on solid data, including the energy rates in your zip code. This data was sourced from the EIA, and while not exact, is important in determining accurate savings. After all, Hawaii businesses pay 3 times the electricity than Chicago, and New York and California pay twice as much. This is essential to determine a Return on Investment (ROI).
The app then allows data entry of different products in your building, including internal and outside lighting, HVAC, computers, and TVs through Smart Power Strips, and appliances. There is even a section for understanding electric vehicle charging costs, to help influence that decision based on your zip code and energy rate.
Verde Final Energy Report and Recommendations
The Verde Green Energy app makes recommendations on where you can save the most energy, helping you make important decisions and really focus on the lowest hanging fruit. For example, why spend $40,000 on an electric vehicle when you still have outdated lighting in your businesses parking lot?
If you are interested in more information about this free tool to make your business more energy efficient, please reach out to us! Give us a call at (773) 413-9587 and ask how you can get connected with the Verde Chicago team.
Hear about our journey from Verde Sustainable Solutions to rebrand to Verde Energy Efficiency experts in The Verde Manifesto.
In 2010, Verde Chicago was launched to help change the way the world thinks about energy efficiency. We have had a ton of support along the way, including 1871 Chicago, Foundersensei, grants from the University of Illinois at Chicago via the Department of Commerce and Economic Opportunity, mentorship from the Impact Engine staff,as well as countless other opportunities that kept us going.
In 2016, we formed an advisory board at Verde. Out of all of the moves we have made, this might have been the most important and helpful for our growth and trajectory. Here are the 5 reasons why.
I had been running the company for 5 years without an advisory board or any investment, so why make the change? The advisory board brought some consistency to my strategy and planning. It forced some accountability, so if we left a meeting with a plan to hire two more energy efficiency analysts, I better have a good reason why there has not been any progress at the next quarterly board meeting.
Board meetings take a lot of planning and preparation, both things I do not like doing. However, this planning and prep were all around the long-term strategy and growth of the company. Where better to spend my time than on that subject?
2. Long-Term Planning
Advisory board members are not interested in an issue with inventory for one upcoming project. They are concerned with all inventory for the future. Advisory board members are not interested in a crisis related to a customer service issue. They are concerned with a plan for dealing with all customer service issues and the brand around a company. Small business and startup owners can find themselves easily focused on putting out fires, responding from one crisis to the next. An advisory board forces you to put that aside for at least a short time period, so you can look at look term planning.
Running a business is a lonely job. You can’t necessarily complain to employees about how hard it can be, as no one wants to listen to their bosses complaints. While there are groups dedicated to supporting entrepreneurs, one of the benefits of an advisory board is the intrinsic support it provides. I highly recommend that you add at least one retired entrepreneur to the board, as they have the time and perspective to provide emotional support. They also often are looking for a challenge and way to continue contributing to the ecosystem, and our current retired entrepreneur on our board is Buddy Green from Deerborn Cable and Wire.
Board members can often open up doors that might not otherwise be available to your team. A quick phone call or note from a board member can resolve an issue, open a sales opportunity, or even help gain information crucial to the growth of the business.
We recently were able to develop a relationship with Tacklebox Brand Partners through the network of one of our board member, which created the Verde Manifesto. Without an engaged board member, in Lorraine Herr, we never would have invested in this opportunity.
5. Hard Decision Making
Board members are incredibly good as a team at cutting into an issue. They are looking long-term in almost everything they consider, so it makes it easier for them to use that perspective to analyze a decision. It also helps them to advise a decision, even when it is very difficult.
All entrepreneurs carry a weight, often which they may not share with anyone else. It took me about 3 board meetings for me to feel confident and comfortable to open up to several of our most challenging issues at Verde Chicago. The answers seemed clear and the board was consistent with their support and advice. Afterward I felt like a weight was lifted and the decision was easy to make.
There are three major principles I find important in growing a team at a startup, including hiring great people, empowering individuals, and making sure the team feels that the workplace is fair. While not perfectly executed by any stretch, here is a bit more about how and why we try to implement this at Verde Energy Efficiency Experts in Chicago.
Tim Smith (Verde’s CFO) told me the story of David Ogilvy, the founder of Ogilvy & Mather. Tim was the Finance Director at Ogivly & Mather, and always talks about the high caliber of people at the company. Here is the quote he shared from David:
“When someone is made the head of an office in the Ogilvy & Mather chain, I send him a Matrioshka doll from Gorky. If he has the curiosity to open it, and keep opening it until he comes to the inside of the smallest doll, he finds this message:
“If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.”
I have always tried to hire people better than me. I have my strengths, but I try to look for folks that are smarter, more organized, better at communicating or anything that really strikes me. We look for giants, and if you know us at Verde – you know we have quite a few.
People are always impressed and ask me how we find such great people. I think business owners are sometimes threatened by others with great qualities. They will find an excuse to not hire those individuals. In fact, one of my friends has a fast-growing firm with over 50 employees. I once asked him who the smartest person at the company and he said, “I am”. While it might be true, my guess is that he isn’t out looking for giants.
I can certainly tell you there are a lot of folks smarter than me at Verde Energy Efficiency Experts. And yes, most of them are better looking than me too.
I recently read the book, “Turn This Ship Around” by David Marquet. It talks a lot about intent based leadership, which is encouraging teams to be empowered by sharing intent, instead of asking for permission. This really resonated with me, as I have never been able to pay attention enough to those around me to micromanage their actions.
Intent-based leadership means that those that you work with will say things differently. “I intend to start an initiative for composting in our office”. This is replacing, “Is it OK if we start composting at the office?”. This subtle difference creates an empowered situation for the employee. It also still keeps the management aware of the plans before they happen. I am at my worst when I find out about something after it is complete, and am unhappy about it.
This is a huge change to the norm, so it takes work and consistent application of the terminology. We all still fall into our old language at Verde Energy, so we are constantly reminding each other how to practice this correctly. However, it is a huge step in the direction fo building a company of giants, as it will unleash their full potential.
Before Verde, I have definitely worked at places in the past that I did not feel fair. I remember feeling like my initiatives and ideas were shot down, just because they came from me. Withdrawing and feeling less active in the workplace were side effects of that experience. Giving less of myself toward the organization was another.
Out of all of these topics, this is probably the one that is the most challenging to execute 100% correctly. However, that makes it all the more reason to put effort into this. Ultimately, this will make sure the organization is visibly trying to create a sense of fairness for all employees.
On Jan 22, Robert Hoffman and Jamie Johnson discuss how Robert’s early passion for sustainability with a business focus has helped him take Shiraleah from a small import company in 2004 to an impactful brand in 2018. Shiraleah imports products from all over the world, with a focus on sustainably made products and socially responsible manufacturing.
Jamie: welcome back to episode nine of the Verde podcast. Every week we talk to local business leaders and entrepreneurs to understand the real story that doesn’t make it to the spotlight but is how actual businesses are actually built here in Chicago. Today we have Robert Hoffman who is the president and CEO of Sheralea. Welcome Robert.
Robert: Thank you Jamie for having me.
Jamie: Glad to have you. Robert, give me a little background about Sheralea I think you’re kind of a unique story in how you took over the business and saw a vision and went after it, so tell us a little bit about that.
Robert Sure. I think you mentioned you’ve interviewed a lot of founder. I’m not a founder of this business. I actually bought the company 14 years ago, but it was such a small company when I took over, and we’ve changed the business so much, I do feel like it’s my baby. I do feel like I started this business from where it was and I’ve taken it to another level. My background is not entrepreneurial. I worked in consulting for about a decade, and I went to business school and during that time looked at a lot of different things and realized what I loved was running businesses. So I sought out to find a business I could buy. I was 29 years old, and you’d be amazed at how few businesses there are that a 29 year old can buy.
Jamie Where did you go look for them? Did you literally look in the Sunday section for businesses for sale, or did you put a flier out?
Robert It was a lot of networking. There is, and i didn’t even know this before I started looking at businesses to buy, there’s a whole business broker network out there. You reach out to business brokers, and the wonderful thing about email they don’t know you’re 29 years old. They don’t know how little cash you have in the bank to actually buy that company.
So I started looking at businesses. This was the third company I started digging in from a due diligence standpoint, but the only company where we came to this is a good fit, here’s the offer. This was a unique opportunity. This one didn’t come from a business broker. I knew someone at the time I was volunteering at an old age home. I was sitting on their board, and I met a gentleman on the board who was a serial entrepreneur. He’d bought and sold a lot of businesses and he’d heard about this business Sheralea. At the time it was Shera, one word, Lea, another word, imports. It was started by a quirky guy who had started a lot of businesses. He was really smart and really disorganized. His name was David. David had the unique ability to start any businesses and bankrupt that same business.
This was the one that seemed to take a better footing. He had actually gone to Yale. Very smart guy. Studied forestry. Had a business chopping firewood and delivering it to people in Chicago. Had a lot of businesses over the years. He was a hippy. He traveled the world, and he fell in love with Vietnamese handy crafts. So he started importing Vietnamese handy crafts. I feel lik I could spend half this podcast talking about David. He was a character. I still talk to him by the way. We’re still friendly.
He saw the unique craftsmanship of these Vietnamese artisans, and started importing small LCL shipments, that’s a less than container load shipment, of lacquer ware bamboo, products from Vietnam, and he would go to trade shows. He had three people. He had one salesperson and one warehouse guy working for him. He would go to trade shows and he would literally, I’m not kidding, this is funny, sleep in the booth. That’s how entrepreneurial he was. He would put a giant blanket over the table his products were on and put a pillow underneath, and he would sleep underneath that.
Jamie Security, you know?
Robert Yeah, no one was stealing his stuff.
And he just kind of built the business that way. Started bringing in more container loads. Then the business grew. When I took over he had been doing it right around the same amount of time I’ve been doing it now. I think we’re in our 26th year of operating. I’ve owned it for 14 years. He had grown it, and it wasn’t profitable. He didn’t know how to operate a business, but he had a business. We took a trip together to Vietnam. I saw the opportunity. The other companies I was looking at were more traditional manufacturing companies. My consulting work was more in traditional manufacturing. My great uncle had a traditional manufacturing business in Milwaukee as well, and I found them to be very capitol intensive, I was worried these types of products were no longer going to be made reasonably in the United States. The fact they were making these products in other companies and they were importing them, I just thought there was opportunity for growth. And we ended up striking a deal.
The deal actually had bene struck with somebody else, and that deal imploded like so many other deals do. I came in and I negotiated deal that worked more for me. It ended up working out really well for him as well. It was a five year contract where he stayed on board and helped me get the business off the ground, and he stayed on on the overseas part of the business, so I didn’t have to travel overseas as much. That’s kind of the history of how I took over Sheralea.
Jamie How many people and how much annual revenue when you bought it? If you don’t mind sharing that.
Robert It was small. I’m trying to remember. Maybe $1 million, maybe less.
Jamie How many employees?
Robert I think he had with his warehouse guys maybe seven employees.
Jamie Okay, and how many employees now?
Robert We have 50.
Jamie 50, wow. That’s incredible growth.
Robert Yeah, we have 118 independent sales reps on the road. We have distribution outside the United States as well. As of about five years ago we set up a separate company in Asia where we have an office run by Americans in Hong Kong when they do all of our sourcing development work, which again allows me to not have to travel overseas as much. Which it seems like that’s going to be a theme in this, I’m not going to travel overseas as much. As much as I love it-
Jamie In an international imports business.
Robert In an international import … I do it. I do it.
Jamie How many times a year do you go now?
Robert Once. Yeah. Maybe twice depending on … we now source from so many countries. Here’s the thing. We’ll go to Frankfurt next month for this large European trade show, and a lot of our vendors, we source from Spain, and Turkey, India, and China, and Portugal. A lot of them will actually be in this fair in Frankfurt. So I don’t consider going to Europe to be overseas actually, even thought technically it is. I’m talking specifically to Asia. You’ll learn soon enough eight hours is not a big deal on a flight. That 15, 16, 17 hour flight, that really catches up to you.
Jamie I actually did my first trip to China in November. Getting there I was fine, I think I was so excited, but the trip home I was pretty beat up for about a week and a half. I didn’t notice so much I was tired, but my mood was off. No one wanted to be around me for like a week, my family included, so I could see how that would wear on you doing that multiple times a year.
Robert Right, I mean I love it. I love going to Asia and I love visiting factories, but you come to a certain size and you realize you can’t do both sides of this business. You can’t run an office overseas and run an office here. You can’t be two places at once. As president and CEO of the company here, I made it my priority to focus on being here. That being said, we talk every week to my staff in Asia for multiple hours. It’s not like we’re not in communication. I can’t imagine how when David first started they didn’t even have email. I don’t know how that even worked in the early stages of the business. Everything has gotten so much easier now.
Jamie Yeah, you had to say awake until 10:00 p.m. to make a phone call over there at 6:00 or something.
Robert I always do the morning.
Jamie No I’m saying David must have back before email-
Robert David was really significantly in Vietnam.
Jamie Oh really.
Robert Yeah, that was the thing with home, so again we could spend a lot of time on David, because he’s got a lot of stories to tell, but he married a Vietnamese woman, so really only in the last couple years, I mean we severed ties from a business standpoint about eight years ago now, nine years maybe, only really recently was he able to bring her into the United States. So he owned a home with her in Vietnam, and he traveled there and lived there.
Jamie You said you changed some of the model or the business. What is different today than it was when you bought it?
Robert They were a traditional importer back then, meaning they would find product specifically from Vietnam in this case and they would then reseal that product here in the United Sates. That worked because he was one of the first people to be in Vietnam at that time. Vietnam has wonderful handy crafts, but they don’t have, even to this day, the manufacturing capabilities of other countries. It’s very cottagey. To make 100 in Vietnam takes 100 times as long as it takes to make 1, versus in China, or India, or Spain, or Turkey, or wherever, there’s so many economies of sales, there’s so much technology there, and they can make 10,000 in a very short amount of time. There was always growth issues working out of Vietnam.
What we’ve done, we built a brand. We now design all of our own products. We’re not just bringing in handy crafts. We’re actually bringing our own designs under our own brand. I would say in 2017 5% of our business at most was from Vietnam, so we’ve kind of gotten away from that market.
Jamie This is a little bit off topic, but I just find myself thinking about it. When you bought this business you saw US manufacturing declining. Today do you feel there’s a future for US manufacturing to increase, or is that a lost … ?
Robert No, I mean there’s room in certain sectors, but you have to be very good at a specific thing. I’ve had clients that were food manufacturing clients. They’ve done wonderfully over the years. When I was a consultant, companies that manufactured plastic injecting molding, some of them have done well, some have not done well, but they were a one trick pony. My vision was this. We have 3,000 different products, we’re scaling from fashion accessories to gift products, to home décor. Our brand is kind of modern casual with an indie wanderer global feel, so if the product fits, whether it’s a vase or a scarf, or a picture frame, we add it to our line. The world is our sourcing opportunity. We really can go to a lot of different direction with the product. That’s why I love, that we’re not limited by one thing. That to me would get old.
Jamie Right. Where do you mostly sell? Where are most of the products found?
Robert We sell to about 3,000 independent retailers, and probably about 100 larger retailers. When I say larger, we sell to Anthropology, and Nordstrom, and Macy’s. More the department stores. Obviously the biggest growing contingent would be our online business. Currently we’re 100% business to business. That model will be changing this year. That’s a big change to our model as we finally bite the bullet and go B to C this year.
Jamie Is that via Amazon or a different outlet?
Robert We’re building our own website right now. We have our own website, and we do a lot of business B to B that way, but we want to control our online portfolios. It will be selling on our website, it will be selling via our website, on Amazon, so we can control pricing on it, so we can control our image. There are a lot of people out there buying our products and reselling it in a lot of areas, but we want to control that model. We want to control the name that’s being put out there, the pricing, the type of products. That’s six months we’ve been working on this project, and knock on wood Valentine’s Day we should be watching.
Jamie Cool, congratulations.
Robert Thank you.
Jamie Most of my business experience is through lighting, which you know, and I don’t get very excited thinking about distributors and different touch points of the distribution network, but I do always find direct to consumer interesting, and more exciting, and more opportunities that you can have control over it, which seems like it would work well for you.
Robert One of the underlying core beliefs I’ve always had in running this business, you can simplify it in one word, and that’s hedging. I always want to hedge my business. I don’t want to have one manufacturer overseas that makes a significant portion of our product. I don’t want to have one client, and we don’t have one client that’s more than 5-7% of our business, so this is just another opportunity to hedge my business and spread out the opportunity to more clients. I understand it will be a learning process for us, because our average order right now to retailers is $1,000. Now we’re talking about maybe $20-$30, so it means changing our customer service. It’s changing our warehouse, and logistics.
I actually had UPS in here, and we’re renegotiating the contracts. We’re a huge client of UPS. They have a whole trailer in here everyday, and the types of products and types of packages we’re shipping out isn’t the small, it’s the larger boxes, so we need to renegotiate our entire contract based on this. We gotta change the way our brand … How products are packaged in a brand perspective. Even our invoices and packing lists. Everything from the top down as to change a little bit as we go down this model.
Three or four years ago retailers were very resistant to working with companies that were also selling direct, because they saw the wholesaler as competition. Now everyone’s really doing it, and they understand they have to add their value by having a presence in their stores, and marketing their products. They appreciate the fact that we’re going to market, and we’re keeping prices like an MSRP pricing. We’ll be supporting them on that.
Jamie The customers come in here won’t find less expensive pricing, which is good-
Robert Right, and by the same token if they want to touch and feel the product, they can go on our site and they can find a local retailer and then buy it there as well, which is what we want to promote.
Jamie That’s exciting. I look forward to seeing it.
Robert Me too.
Jamie Hopefully by Valentine’s Day I can get my wife a present.
Robert Right, yeah. By Valentine’s Day. What’s the chances of that actually happening?
Jamie Well you seem like a pure operator who’s pretty good at it, so I imagine if you get something going you’ll probably get there. I wouldn’t. I’d be a year and a half off, but I’d be talking about it all the time.
Robert Well we’ll see. We set a timeline. One week we’re behind, the next week we’re ahead. I can never figure out what’s going on with this project because there’s so many moving pieces, but … like the bibliography of every report you ever do. The last 10% takes 40% of the time. I hope it does well.
Jamie What are you favorite parts of running your business? You were talking earlier and you said there’s 40% that you really love. What gets you out of bed in the morning the most excited to do?
Robert I love the fact that every day I do something different. That’s really important to me. I would say I spend probably right now half my time on day to day operational things and half of my time on strategic things. We have a lot of bigger projects rolling out every year, and I try and oversee those projects. The day to day operational things are not the more exciting things.
I just thought it was funny, ironic, that they were talking about Jeff Bezos, now they say the richest man in history. He’s really, really tight with money. Did you read about this in [crosstalk 00:18:07] they were saying oh he doesn’t just fund projects. He’s very careful where he puts his money, and this and that, and I laughed, because they ran in an unprofitable way for 20 years, and they invest billions of dollars in infrastructure, and I think about how the fact that I have to be the double suspenders here a lot of the time as well, that you come up with these grand plans, but you’re constantly having to reel back on things. It’s fun to be the guy with the ideas, it’s not fun to be the guy with the suspenders. And you have to do both. Sometimes you gotta reel yourself in. That’s not fun either.
Jamie You have to come up with ideas and at least flesh them out enough, and sometimes fleshing them out is taking them a little bit to market and trying … I find in my business I like to take new initiatives on. For example, a year and a half ago we started doing rooftop HVAC units, and the first one we lost money on for sure, and so it is hard to be that for both yourself, the belt and the suspenders idea, but you gotta try a few and be willing to …
Robert I was thinking about this right when we started talking. When you go into a business, whether you’re buying it or starting it, there is an inherent risk in doing that. Then you get a little bit situated and you have some staff, and it become easy to become risk averse. I don’t want to lose this. I’ve got a pretty good gig going right now, paying my mortgage and this and that. My staff is great, and I don’t want to mess anything up. But you have to take those risks. And they’re calculated risks, and that’s great.
Sometimes a risk today because a business is more established is a different kind of risk. You might invest in this case $100,000 in a new eCommerce platform-
Robert 10 years ago $10,000 seemed like a lot of money to invest in anything.
Jamie Right. I totally get you on the risk averse part, because that is something I feel. I also feel like this incredible drive to grow, and I don’t know if you also feel that as well-
Robert I do. I really do.
Jamie I talk to people about it, and they try to dig and try to understand. I don’t think I have a good reason why. It’s not financially motivated for me. I mean … I’ve already got more money … I’m not wealthy by any stretch. I’ve driven the same car for nine years. I’m not going to change that part of my life, but I’m driven to grow the company and I don’t quite understand that.
Robert That’s human nature. People are just born that way. It’s very possible with you, because I feel this a little bit with me, my drive to grow the company is because you don’t want to be doing the same thing every day, and when a business becomes stagnant, or stable, or flat, or whatever you want to call it, you end up doing a lot of the same things over and over and over again.
Someone said to me, and I’m sure you’ve head this, if you’re not growing you’re dying. I don’t necessarily agree with that, but I do feel the fun part is about trying to figure out creative ways to grow the business.
Jamie I totally agree. I also think it’s hard if you see a vision for opportunity and you’re not taking it, it’s painful. I strongly feel solar is going to be a much larger part of our conversation in Illinois in particular in the next five years, and everyday I do a little bit of this risk averse waiting, and it tears me up inside. I want to dig into it.
Robert What’s holding you from just going down that path?
Jamie I just think there’s so much growth right now in what we’re currently doing that to deviate out too soon would take away from that.
Robert I understand. It’s focus.
Robert Yeah, it’s easy as an owner to become unfocused.
Jamie It is, it is.
Robert It really is. And your role becomes a little bit different as the business grows, and I think you’ll find that. When you had … how many employees do you have now?
Robert So you have 24 employees now. Running a business with 6 employees, or 12 employees, or 18 employees, your role as the CEO changes dramatically. Sometimes you just have to step back and say this is not the business, what I was doing before isn’t working now, and just kind of change … the problems become bigger, but the opportunities become greater too.
Jamie I agree. Cindy who we both know actually told me once every time you double in size, every process you have breaks and has to get redone. How many times have you double in growth in the 14 years?
Robert Oh my god, a lot. I’d have to figure out the math, but a lot.
Jamie I’ve experienced that, it seems like every year. We’ve doubled about every year, and we have to take a look … I mean we were doing something today and I cannot justify why we still do it. It was important a year ago, and today this process is just …
Robert Oh yeah. The way technology changes. We have a legacy ERP system that manages all our backend stuff, and we haven’t changed the actually name of the ERP system in 14 years, but what we use it for today versus what we used it for 14 years ago, it’s totally different.
Jamie What’s the most challenging time you recall at Sheralea?
Robert I knew you were going to ask me that. For me the most challenging time was when my father got sick and when he died. That was very hard because for one thing it was very time consuming, both emotionally time consuming, being there, spending the time with him.
Jamie What year was that?
Robert He passed in November of 2014, so a little over three years ago now. But he had been sick for a while before then, and then it got worse as it often does with cancer, and that was hard for me, because he was a big sounding block for me in terms of ideas, someone who always encouraged me to do what I wanted to do. He was very bright, he was very talented in the legal profession, which was what he was. He was really at the pinnacle of that. It would have been very easy for me doing management consulting, going to business school, to just kind of go down a path that most people go down, and that is management consulting, investment banking, or private equity. And all those things held an interest for me, but it was really him who said to me you want to run a business, you should try it.
I was in my 20s when I bought this company, and I kind of think that was kind of crazy in hindsight. What was I thinking? To put the capital I had put aside, all of it pretty much, into buying a company, taking on, it was a leverage buyout. Taking on debt. Newly married. Wanting to have kids in the short run, which we did. It all kind of paid off. I think it was his encouragement. When he became sick, it made me kind of reassess things, and also I think just muddied my general thinking as well for a while, because it was just kind of hard for me to come to terms with his mortality, because I think that makes everyone think about their own mortality as well.
I would say really only in the last 6-12 months have I started to have more clarity about that. Took some time. I would say for the first time in … 2014 actually was a phenomenal year. 2015 we didn’t really grow that much, and I know that was because I wasn’t really focused that much on the business as I have before. Yes I was showing up everyday, yes I was physically present, but the focus wasn’t there. I think with any small business, the culture, the mentality of the owner or the president, pervades everyone else here. If you’re excited about things, if you have that really, really strong opinion of things and that conviction is there in what you want to do, it drives everything forward. I didn’t have that for a period of time, and it affected my business.
Jamie I would have to say one of the surprising things about owning a business is that your personal mood and really how you define yourself is so wrapped up in how your business is doing, because it consumes so much of your thoughts. I haven’t had any real challenges. I guess it’s been eight years. I’ve had the birth of a couple children, and so that can be exciting and really elevate. I’ve had marriage problems like everyone else. I do think the day to day stuff, you bring it in, and it affects both ways, positively and negatively, and you take it home and you bring it into work. It’s not something I expected.
Robert I mean we are the bedrock of the company. If we’re not the one being the sounding board for everyone else, sometimes things kind of fall apart. I don’t show up everyday thinking today is going to be a great day. I show up everyday feeling like today is going to be a day with the opportunity to be a great day. Hopefully nothing goes wrong during that day. I consider myself personally to be a very even keeled person. I don’t get too up, I don’t get too down. I like to show up early in the morning and be the first one in the office, and kind of set that baseline for everyone else. But yeah I mean you have to be affected by the way the business is doing. You get a big contract and you’re feeling really good. Maybe you’ll take your wife out to dinner that night some place a little bit nicer. Than all of a sudden that contract, you put everything in, and the guy decides not to pay you on time, and all of a sudden you’re picking up Mcdonalds.
Jamie Back to Ramen soup at home.
The last question, and I’ve been excited to talk to you about this because I know your background actually comes in sustainability. I always like to ask everyone, tell me about your experience in making sustainability a priority in your business. How does it affect your planning? Why do you do it? I know you personally do put some time and effort into sustainability. Why do you do that? Why do you think it’s important? Also what are some of the benefits you see?
Robert Kind of back up a little bit. You said you have a background in sustainability. What does that mean? It means in undergrad at the University of Michigan I studied environmental policy and behavior, that was a big focus, and I have a degree in science. I kind of always felt that … in fact when I applied to business school my essay was that I want to one day run a business that’s socially responsible. Believe it or not. I was shocked University of Chicago let me in.
Jamie You ended up on the wrong way of the midway. Should’ve gone to policy school with me.
Robert I probably should’ve. Early on we put a really focus on socially sustainable, environmentally friendly products. As we have grown, we’ve kind of continued on that but we’ve changed our brand away from that. But it’s always in the back of our mind with any products that we take on. It has to have an environmental, a social, or a sustainable aspect of it. People appreciate that. Everyone loves a story, whether it’s 100% recycled glass from Spain, or handbags we bring in from Vietnam where we give a portion of that back to the actual village and the children in that village. Children are not the manufacturing by the way, they’re just in the village. Trying to give them a higher quality of life.
Then sustainability as well. I don’t want to drone on about the importance of it, but I feel we have to take responsibility for this. I truly feel if we don’t do it, it’s a mistake we’re going to be paying for, and our children will be paying for, and our grandchildren will be paying for. It’s a big part of what we do. We don’t sell leather products for instance, because the tanning process can be very environmentally hazardous. We do sell polyurethane products. Why is that important over say a PVC product? Polyurethane we test is and we make sure it’s all what’s called Prop 65, which is a California environmental statue compliant. It has almost no lead content in it. All of our fashion products as tested. It’s an additional expense, but it’s something that we believe in and we’re willing to have that expense be paid to make sure it’s compliant so that we’re not harming people with the products that we sell.
Jamie Do you market that a lot? Is that very evident in the products when people buy them? Or is it just part of the brand awareness overall?
Robert It’s part of the brand awareness. We could probably be doing a better job of that. In terms of marketing that, the people who have been buying from us for a long time know it, meaning the retailers, but maybe not the consumers.
Jamie What’s interesting, I remember an article, and I’ll try to link to it in this podcast, but it was a Harvard Business Review I believe of countries that have corporate sustainability in place in the 2000s outperformed their peers that didn’t. I don’t think that’s because green marketing and all the people read the social sustainability report and decide to buy the stock and push it up or decided to buy the products. I think it’s because people that get that and put thought and time into running something obviously run their business well.
Robert Yeah, I think people want to be part of something that’s bigger than just themselves.
Robert I think I read the article, and in think that was kind of the core takeaway from it. People don’t want to just show up to a job. They want to be part of something that engenders some sort of feeling that’s just meaningful for them. We have here four committees, and everyone in the office has to be a member of one of these four committees. We have a social committee, because we want to have fun. We have a cause committee, because we want to be passionate. We have a charitable committee because we want to give back, and we have an aesthetics committee because we want to work in a place that we want to show up to everyday. Being part of these groups makes people feel here that they’re a part of something.
Jamie I think especially with the millennial generation that’s really important.
Robert Growing that.
Jamie Yeah, it’s a growing part of our workforce for sure.
Robert Yeah, it really is. I mean we had this large sub-sect of our organization that are millennials, and you and me, we’re not. It’s like sometimes it’s a different language, but …
Jamie But we’re both in … I remember a McDonald’s franchise owner once complaining about it, and I could see it’s challenging age group for them, because non people wake up motivated to work in that industry, in the fast food industry, but there are a lot of millennials that care about sustainability or energy efficiency, and a lot of them probably have a lot of passion around the fashion products that you, you know. So if you can find those right employees, I’m certain we both will benefit from being in the right segment at the right time.
Robert I think you’re right. I think you’re right. I mean, we don’t struggle to find good people. We don’t struggle to keep good people.
Robert You’re the same.
Jamie I agree. It doesn’t mean it’s not easy to find people, but it’s still hard to make decision and to know when to hire, but yeah we don’t have employee turnovers the way I hear other careers.
Robert No we don’t either. We really try and treat people well.
Jamie Yeah. Well Robert, I’m glad to catch up. It was great to hear more. I’ve known a lot about your business and been very impressed for many years, so it’s great to hear more of the background, and maybe the next podcast we’ll bring David in and talk to him.
Jamie: Welcome back to episode eight of the Verde Podcast. Every week, we talk to local business leaders and entrepreneurs to understand the real story that doesn’t make it to the spotlight but is how actual businesses are actually built here in Chicago. Today, we have Matt Botos, who’s founder and CEO of Connect Food. Welcome, Matt.
Matt Botos: Thank you very much. I appreciate it, Jamie. It’s great to be here and talk about my passion.
Jamie: Good, good. Well, let’s just kick into it and then at some point, I’m sure we’ll reveal that we’ve known each other for-
Matt Botos: Many years.
Jamie: Longer than we want to admit. Yeah, 20ish probably years. Tell me a little bit about Connect Food, how you started the business, why, what drove you to take the leap into getting it off the ground.
Matt Botos: Sure. I’m the former director of the State of Illinois Food Safety and Technology Center, so I saw a massive need to help food companies with their fundamental food safety plans. The question is how do you do that? How do we do that online? I would say that when I started in the industry in ’95, we weren’t ready. The food industry kind of lags behind in the way they adopt technology and what we decided to do at Connect Food is that we would have an online portal to kind of reduce a regulatory pain point. In 2011, Congress established the Food Safety Modernization Act, which essentially said that every food company needed to retake their food safety driver’s test, so there’s large companies that were ready. They have all those resources and things of that nature, and then there’s the small- and medium-sized food companies. It’s estimated that there’s 125,000, give or take, food companies registered with the Food and Drug Administration.
Jamie: Is that in the US?
Matt Botos: It’s in the United States. Correct. Then from those companies, 80% of them probably have less than 100 employees, so what kind of resources do they have? We wanted to have the best technology in the world in order to help them with their food safety plans. Instead of having to go to a consultant or go to a university extension service, we wanted an online portal where they could go in, tell their story about what product they make, whether it’s a salsa or kind of a bakery product, and then give them the tools that are online if they can follow through that. It’s not unlike a TurboTax for food manufacturers, but we wanted them to be able to go online, tell their story, and then one of two things. If they’re comfortable with the plan that is produced by the technology, then they can use that as they would. If you’re going to sell to a large grocery store chain, they want to know, “Do you make your product safely?”
You have state and federal regulators that come into your facility to inspect and you have to be able to tell your story. The old saying in the food industry is that if you haven’t documented it, you really haven’t done it. That’s what they’re looking for and so we provide that at Connect Food and just the whole range. Just imagine walking into your favorite grocery store and looking at all those products from the refrigerated section all the way through canned goods to things in jars to things in boxes. Each one of those products has to have a food safety plan.
Jamie: Is your customer the manufacturer of the foods, typically?
Matt Botos: No. That’s a great question. When we first set out, we wanted to be kind of a knowledge collection portal. “Hey, let’s talk about how we’re making this. Hey, I need help doing this.” We found out that that really wasn’t a sustainable business model, so what we did is we started targeting people that actually make food products. There’s different kinds. There’s the person that owns their own cookie company and then there’s a person that goes to what’s kind of a contract manufacturer or co-packer, and that co-packer can make 100 different products for a brand owner, but what we’re finding now is that so many entrepreneurs in the local foods movement that actually own restaurants really want to figure out how they can put their product on a store shelf.
They’re looking for resources and our goal eventually, and I think we’re well on our way, is to be the number one company in the world that provides food safety technology for companies. Along with that, too, we have a whole stable of food safety experts that we work with. Somebody comes in with a complex question, we can go to a PhD in food science or a PhD in food packaging and they can help on that larger project. It’s not only a subscriber model. It’s also a model where we’re bringing on more complex products.
Jamie: What were you doing professionally when you decided to take the leap into starting Connect Food?
Matt Botos: Well, it’s been up and down. I started out designing food and pharmaceutical processing systems and then selling aseptic packaging. Then I came to work at a not-for-profit, which was the Food Safety Center here in the State of Illinois, so you kind of got a big picture there. Had a little change. Went and did a startup that didn’t work out exactly the way I wanted it to, so that was a good lesson learned, and then went back into a consulting just on my own. I said, “Hey, I can help you with your food safety plans or I can help you with an engineering design,” and then when I sat down with some other people and we talked about, “Wow. We can really do this online.” My programming team is the best in the world, so the technology that they put out there is amazing.
Jamie: Cool. What year was it that you started it?
Matt Botos: 2011.
Jamie: So you’ve been doing this for a couple years?
Matt Botos: I’ve been doing it for a couple years. It’s interesting talking. We started growing so much in Chicago and obviously, we reconnected at 1871 and then there’s Matter and then there’s other of these spaces where all these good ideas are coming together. It just really seemed like the thing to do and initially, I think that I was a little frustrated that everything didn’t take off faster, but as you talk to more entrepreneurs and you talk to more people, you realize that it’s … You just don’t get out there and write code and then become a millionaire.
Jamie: Yeah. Everyone has the vision of the Facebook story where it just started and kept accelerating day after day, month after month. Everyone hears from when it took off, not the nine years that it took leading up to the idea of grinding it out. That’s the real way businesses are built. People forget that.
Matt Botos: Well, and when you’re an individual contractor and you’re working with food companies on a day-to-day level. I love being in a food manufacturing facility, sometimes sitting behind computers can be difficult, but the team that we’ve built at Connect Food is amazing. It spans all across different skillsets. You’ve got organizers. You’ve got coders. You’ve got people that focus on sales. It really does take a team and Connect Food would be nothing if we didn’t have all those people behind us. That’s another thing you learn and it takes six, seven, eight years to build all that there.
Jamie: For sure. You kind of already started talking about it, but what are your favorite parts about running the company? For me personally, I tend to enjoy more customer interactions and being out in the field than I do operational-minded. It sounds like you’ve got some similarity, but you also have a lot of pride in your team. What do you wake up each day looking forward to doing?
Matt Botos: I actually truly love food safety. I like looking at where companies don’t get it. It’d almost be like if you were a language teacher. There’s that communication gap a lot of times between their auditor or their regulator or their customer that they’re having trouble telling their food safety story. Connect Food provides that solution, so the most enjoyable part for me is taking something that you don’t meet a lot of people out at lunch or a coffee shop that says, “Yeah, I’m a food safety expert.” The educational part of it is good, too.
I’ve had tremendous opportunity over the last two years to work with the FSPCA, which is the implementer for the Food Safety Modernization Act and teach over 35 classes across the country for creating either lead instructors or these PCQIs, qualified individuals that have food safety knowledge and they take it back to their facility. I think the educational part of it, too, is something I always look forward to, so whether that’s having a phone call with somebody or seeing somebody that calls or writes an email and says, “Thank you. Your software is so easy to use and it’s really good,” or I personally, such as yourself, I like being out there in the field.
Jamie: I’m just curious. What about food that’s made outside the US? Does the US regulate that in the same way?
Matt Botos: Sure. It’s very difficult at times and remember, there’s many, many, many agencies that regulate food from not only FDA and USDA, which we’re most familiar with, but CDC, EPA, NOAA. It goes on and on. There’s, I think, between 10 and 15 agencies that have their hands in food somehow. It’s always a challenge to, once again, help with that translation more than anything else, so from a foreign perspective, we’ve had issues with products that come from other countries. Who’s the regulatory authority that they’re supposed to work with? How do we know that it’s coming in? There’s so huge volumes of food coming in. FDA, just part of the Food Safety Modernization Act, is the foreign supplier verification piece of that. They are pushing out there. We’re kind of going up and down the food chain in a way that we really have never done before.
We’re saying, “Prove to us and tell your story,” that’s the reason we created Connect Food, “About how you make that product.” If it’s coming in from another country, we want to see that documentation. We want to see that you understand what we’re asking here domestically and we want you to provide that same information. Of course, language is an issue, all kinds of different things, but it’s only getting better and better.
Jamie: Your product really is an international product, or in the future has the ability to be?
Matt Botos: I’d like to say, “Yes,” but I would be … We’ve talked to a couple different groups about translation in the software. We’d really like to do that. Like I said, I’m really proud of what we’ve done, especially the last two years, and gotten the technology. Once again, I can only say that the team is the one that did it to the point where we can provide solutions, currently in English, for anybody that can log on and can handle the software.
Jamie: Kind of switching topics a bit. Since 2011, what has been the most challenging time in running Connect Food? I guess, was there a particular event that led to it and then kind of how did you get through it?
Matt Botos: Well, I think money’s always an issue. The number one thing is, “How do you get funded?” Friends and family have been fantastic. Everybody’s chipped in at different times. I think there was a point in time, maybe three or four years ago, where everybody on the team was frustrated, whether it was money or someone saying, “Hey, Matt. You’re not doing your job as CEO,” and I said, “Well, of course I am.” Upon reflection, these people were right, so at the end of the day, I think we kind of hit a low spot between cash. Technology was never an issue and the food safety knowledge was never the issue, but how were we going to come together as a team and really implement this.
Between money and synergies and efficiencies, that was really the hardest time because there’s sometimes you go, “All right. We created this and then what’s it worth now? Why don’t I just sell it?” We got past that hurdle and I think finding money is tough in Chicago. I’ve really found that. Everybody talks about the coasts, the coasts, the coasts. I mean, this is the bread basket of the entire United States. You would think money would be easier to find, but also, I can once again put the blame on myself. Maybe I haven’t tried hard enough to get that money because everybody in the company is an owner at some different level. Do we take other people’s money and dilute? Or we’re so close right now. If we had 1,000 people in the system right now … Well, actually we do have 1,000 people in the system. We don’t necessarily have 1,000 paying people, but you’re trying out new things, too. You just want people to adopt, so I think cash flow’s always a challenge.
Jamie: I’ve been there, for sure, cash flow. I remember I have a D-Day. I can’t remember what year it was. 2013, maybe? 2014, when the utility program ran out of money abruptly. It was January 5th. I had just spent $20,000 on inventory and it was literally two days later that they had inventory arrive, get it all on the shelves ready to go, and then the utility program ran out of money. It was four months. We had to ride it out. Those are the times when my wife has been more patient than I deserved.
Matt Botos: I think the ability to … the sleepless nights, and to get through ’em and once again, have people around you that are supportive is the most important part.
Jamie: I don’t know if you feel this way, too, but I find that sometimes those hard lessons I’ve taken over the years, I stick with, I hold on to ’em a little too much. I get a little bit too risk-averse at times now and that’s not my nature because I’m holding on waiting for that next shoe to fall off. I don’t know.
Matt Botos: There was a quote, there’s many different versions of it, but I’ll never … It was off a TV show, I don’t know, 15 years ago. It says, “I am what the world considers successful, but I’ve failed so many more times than I’ve ever succeeded.” Not my line, but you have to just keep going. I mean, there’s no other option.
Jamie: Well, and I think a lot of times, people do, for whatever point they’re in life, they have to move on and give up their dream and move on to a real job. I’ve been at that point so many times that I’ve got a lot of respect for people that make that choice and a lot of empathy. Sometimes we’re fortunate to keep pushing through and sometimes we’re not but definitely sticking with it is part of what builds success. It takes time and it takes a lot of grit.
Matt Botos: When you’re an employee-owned company, I think that everybody gets frustrated at different times, but at the end of the day, when we’re that “big success,” we’re success now, but when that financial goal is hit, whatever we decide that is, it’s going to be worth every minute.
Jamie: Yeah, you were saying three or four years ago was when you were at that low point and it’s funny. I remember it must have been three years ago that I was at some kind of State of Illinois thing and I grabbed a picture. They were talking about Connect Food. Somebody from the State was talking about it and I texted it to you and you said, “Really? I didn’t know that was going on.” Sometimes, there’s momentum happening even outside of your purview.
Matt Botos: Absolutely. People say, “Well, why don’t you take your business to another state?” There’s challenges in every state, but we’re from Illinois. We grew up here. I want the Illinois company success story to be told again and again and again. That happens under different governors, under different mayors, under different elected officials, different agencies we worked with, but food safety’s one of those things that it’s hard to throw stones at because everybody wants safe food. It’s good to have partners that believe in you.
Jamie: Well, Chicago’s got … I mean, it’s obviously a huge … I mean, we were built on cattle coming into the city 100 years ago.
Matt Botos: Absolutely. We have … Well, once again, these are estimates and these numbers fluctuate, but it’s estimated that we have about 4,000 manufacturing facilities or food companies in the state of Illinois. We have 73,000 farms. Cook County alone, I think, has 600 to 800 food manufacturing establishments.
Matt Botos: I mean, everybody … You just know what’s in Chicago. I mean, sometimes you can just smell the chocolate.
Jamie: I used to live right by that Blommer Chocolate Factory and I think that’s why my wife married me.
Matt Botos: It’s a fantastic city. It’s a fantastic state. It’s a great state and we have so many resources. We have the Institute for Food Safety and Health here, which is the awesome partnership between universities, regulatory authorities, FDA specifically, and companies that we have here. We’ve got massive food companies here and you go down the street to the hatchery or some other local foods event and you’ve got people just say, “I’ve got a great idea and a great recipe.” The good thing is, they all need a food safety plan.
Jamie: Yeah, Chicago gets a bad rep for sure and I get frustrated by that. I’m with ya. People often ask me if you want to … My business has changed over the years, but we could theoretically move outside of Illinois and expand. I just think there’s … I do a lot of visits to manufacturing facilities and every part of Chicago’s got more than you would imagine. It’s unbelievable how much depth Chicago has, so I’d rather just personally grow my business going deeper into Chicago. Illinois’ a great state. It’s got its problems, for sure.
Matt Botos: Well, but as long as I think business owners like ourselves commit to staying here, then that’s really what we need.
Jamie: That’s how it was built, the dredges of the canals were built by the early civic society and Chicago needs the next group of leaders to stick around and do it. We’ve got it, for sure.
Matt Botos: For sure.
Jamie: There are more important people than us doing it, so hopefully we’ll just kind of be the second layer of-
Matt Botos: Maybe we’ll be important someday.
Jamie: We’ll see. We’ll listen to this in 10 years and then say, “Oh, well maybe not. One of us was. Matt was. Jamie wasn’t, but that’s okay.” The last question I always ask people is, and this is just because it’s kind of my personal passion and what I get to do with my time is to interview people about my passion, but tell me about your experience in making sustainability a priority in how you’ve grown Connect Food?
Matt Botos: Sure. I think sustainability’s always … At one point, I think I had a tagline on a business that said, “Safety, security, sustainability” and that was the big keyword, but I think it’s more about efficiencies. I was telling you this story, writing something down the other day and thing at the top of the list is “Do not procrastinate.” I think it’s about efficiencies. I think it’s understanding the strengths of your team. One thing that we’ve done poorly and we’ve gotten better at it was, “What are we spending our time doing? Do we really need to run forward and get this done or is there some way we can be more efficient or more sustainable inside by not ‘hurry up and wait’ kind of thing?”
I think that between our team at Connect Food that that’s been highlighted. If you don’t talk about it, you can’t fix it, so we definitely talk about that, sometimes more aggressively than other times, but I think just realizing where your weaknesses are and being comfortable with your strengths makes you a more sustainable company. I really feel that we’re not perfect by any means, but we’re doing a much better job.
Jamie: Well obviously, sustainability and food safety … The food movement has changed so much and with local comes different concerns, I guess.
Matt Botos: Yeah, sustainability in food manufacturing, what we really try and do is give people tools so they can be as efficient as possible. Once again, I don’t care if you’re baking or making a salsa or whatever you’re doing. We want you to be able to tell your story in the least amount of time with the best information. Sometimes you don’t even know what you’re doing well and so when you talk about sustainability in food manufacturing, that’s efficiencies, but it’s also, “What are my inputs from an energy standpoint?” I mean, there’s so many of these facilities. I’ve been to, I don’t know, hundreds and hundreds of food facilities and some of them are just old buildings that somebody retrofitted and energy consumption’s horrible. They don’t care because they’re making money.
Then you’ve got other people with a LEEDs building, but they’re not sustainable in their manufacturing because they bought the wrong equipment. The food industry continues to, from a … I mean, food technology is such a cool business and it surrounds us from what you pull off the shelf to drink to what you put in your stomach to how it go there, it’s amazing. I think the food industry, many companies do it very well. There’s also a large portion of those companies that could be more efficient, whether it’s the materials they bring in, what they’re bringing in, the energy usage that they have, where they’re getting their products from.
Jamie: This is a little off topic, but I’ll ask it because we’ve got a little more time, but I remember studying in grad school and the conversation was the carbon impact of how food arrives at different places and train and boat was far more efficient. I think it was 20% or 10% of the carbon impact as flying. Does most of our food come by rail in Chicago or is it flown in? I’m sure seafood is flown in.
Matt Botos: Sure. O’Hare is obviously a major entryway. From a percentage standpoint, I couldn’t quite tell you. I would say trucking is the one that I recognize the most, but we were talking about this the other day, about is there one food organization to go to for all this information. If you look at shipping everything from soy and corn, which were always one or two with Iowa in production there, that is a big rail business, so it depends on the commodity. It depends on the price-point, so packaging material a lot of times is trucked in, but resins for people that manufacture packaging are a rail system. From a commercial … I mean, geez. All of our seafood comes from some kind of commercial shipping vessel at some point. It travels some other way. The scope is so big. To try to write out that equation … What are we focused on here? Are we focused on tomatoes? Are we focused on animal feed? Are we focused on produce? It’s kind of all over the board, but I think in all aspects, everybody can always do a better job.
Jamie: Well, that’s one nice side benefit of the local food movement, is that you get fresher foods and the environmental impact of bringing it to you is lower.
Matt Botos: And we’re excited to be able to be a part of that food chain where I don’t have to necessarily get on an airplane and fly to a local foods person in Boston or New York. Now, they can get online and interact. From a sustainability perspective, I do want to take all of food safety consulting business away from them, but you can see there’s little impacts all over the place.
Jamie: Well cool, Matt. It’s been great connecting and talking. It’s been too long.
Matt Botos: No, it’s always good to see you, my friend. My friend for … I was doing the math in my head and it’s been 25 years.
Jamie: I think it was ’96. 1996, I think.
Matt Botos: 22 years?
Matt Botos: All right. Well, Jaime, thank you so much for having me.
Jamie: All right. Great. Thanks again, Matt. Take care.
When the Future Energy Jobs Act was passed in 2016, it changed the way Illinois supported the public sector in energy efficiency. Historically, the Department of Commerce and Economic Opportunity had run programs to meet energy savings goals for the state in the public arena. However, in 2018, the ComEd Energy Efficiency Program will now be taking on the awesome task of reducing energy usage in firehouses, police stations, libraries, and all municipal buildings.
Like commercial buildings in Illinois, Public Sector buildings are broken into two rate classes. The “smaller” buildings enjoy a higher incentive since they often lack dedicated employees to focus on improvements throughout the facilities. Both programs are great, but have a different approach and feel as larger and smaller
Public Sector Small Facilities
Like the commercial sectors, Small facilities are classified as 0-100 kw and this information can be found on your facilities electric bill. This type of building is often maintained directly by the fire chief, police chief, or department director. The incentives are higher in this program, to help offset the lack of time and attention that smaller buildings can give toward this type of capital improvements.
Popular in this program are high bay LED fixtures, Type A and Type C LED tubes, exterior new Fixtures, and occupancy controls. This program is new in 2018 and is being administered by program implementer Willdan. Verde has seen success with the Wheeling Fire Department and Sugar Grove Fire Department early in this program, and we have seen great Return on Investments of 9 months ot 1.5 years. As a side benefit, with less continuing maintenance and brighter lighting in these fire stations, the crews can focus more on training and worry less about ballast and fluorescent lamp replacement (or perfecting that New Orleans Style Gumbo Recipe!)
Public Sector Large Facilities
Large public schools, municipal town halls, and water plants are just a few examples of public sector buildings that are often classified as large buildings through the lens of ComEd. This program is administered by DNV GL and was previously the responsibility of the Department of Commerce and Economic Opportunity in Illinois, but transitioned to ComEd’s responsibility in 2018 with the Future Energy Jobs Act.
The Public Sector 100kW – 400kW and 400 kW and above rated buildings fall into the same program as the “Standard” or Large Business program through the ComEd Energy Efficiency Program and incentives are the same.
Highlights of this program include a $.40 per watt reduced incentive for LED conversions, incentives for occupancy sensors, photocells, and daylight controls, as well as support around HVAC and building controls. One of the top highlights of this program is a $.70 per watt reduced streetlight program in 2018, as Chicago and other municipalities undergo major initiatives to modernize street lighting.
Made in Illinois Bonus
In 2018, there is currently a 10% bonus on the incentive for any product made in Illinois (50% manufactured or/or assembled in Illinois). We currently purchase from Jarvis Lighting, which is made in Elk Grove Village. This only applies to the standard public sector program at this time.
Are you a restaurant owner and ever wondered if you are losing money on your HVAC systems? Chances are, the answer is yes. Luckily, there are fairly easy projects that you can undergo to save money and energy.
Air balancing is also an important step to consider. Verde has partnered with Priority Energy to provide commercial air balancing options for our customers, helping to make sure there is not a vacuum inside the restaurant and that air does not rush in every time a door or drive through window is opened. This service can be a quick return on investment, and provide both energy savings and comfort to the customers and employees.
After that, consider these advanced HVAC systems for your location.
Cooking food is a must for restaurants, and taking the smoke and heat out of the kitchen is also required for < style=”background-color: transparent; letter-spacing: 0.02em;”>both comfort, safety, and building codes.
However, exhaust fans are traditionally an on/off control, and they run at high speed as long as there is cooking in your building. For many fast food restaurants, that can be 24 hours a day, 7 days a week. Since these fans need to pull all smoke out of the building, they typically pull a ton of conditioned air out of the building as well. What does this mean? As you try to keep your customers cool on a hot summer’s day, your exhaust fans pull a huge amount of that air out of the building and makes your air conditioner work even harder.
Fortunately, there are advancements in exhaust fans that allow variable speed fans. These can ramp up or down, based on the actual usage of cooking (instead of constantly running 100%). The differences that can be saved on both electricity and gas energy can be significant, although they vary based on your geography in the United States. In addition, you can connect this controller to your HVAC system, to communicate to your economizer on your rooftop HVAC units and really balance the in and out of the air in your store.
This means, when a customer enters your stores or your drive-through window opens, air will be at balance and a minimum amount of airflow will occur. We have heard countless stories of the drive-through window employee being bundled up in winter coat until the Kitchen DCV (Demand Control Ventilation) gets installed, and then they can comfortably wear just their uniform.
Here is a step by step description of what installing a kitchen exhaust Demand Control Ventilation will look like.
First – you need to install Direct Drive or variable speed drive motors in your exhaust fans. We typically use Greenheck, although there are a lot of brands of motors available.
Next, you need to install a central communication system that can control the fan speed. We use the Franke Variable Ventilation. Many kitchen DCV controls insert a sensor in the cooking hood to know when the fans need to be ramped up, but the Franke HVAC system actually connects directly to the cooking equipment to ramp up and down based on usage. Both accomplish the same goal, but we personally have found the Franke system to have stronger ROIs.
Do you lack economizers on your RTU – no problem! There are very generous utility rebates for those as well, and often those make sense to be replaced even if they are only 6-10 years old with a CEE Tier 2 level energy efficient RTU with SEERs as high as 16.1.
Let us help you find those rebates to make these upgrades today!
If you get a chance to read through the breakthrough Future Energy Jobs Act, which is the funding and baseline for the ComEd Energy Efficiency Program, you will find that the state of Illinois is committed to supporting Low Income Energy Efficiency program improvements.
In general, lower income populations, both commercial and residential, pay more as a percentage of their income for electricity usage. This makes sense since electricity in your home or business is a necessary evil – and just keeping the lights on cost some basic level of funding. Those with less money will likely pay a greater percentage for this baseline since their overall income is lower.
As a practitioner of energy efficiency in Illinois, I would say that qualitatively I have seen lower income businesses and churches pay more for electricity than wealthier businesses and churches of the equivalent size. I imagine this is because there is less capital to invest in improvements like LED lights, Smart Thermostats, and upgrade HVAC equipment. For this reason, I am personally excited that more emphasis will be placed on low-income energy efficiency improvements in Illinois – because the needs are greater.
Multifamily Low-Income Projects
Multifamily projects are a great place for energy efficiency projects as they often contain a great deal of 24-hour lighting on the inside, and exterior security lighting on the outside. We love doing work for long operating hour locations for two reasons.
First, the long hours mean that the Return on Investment for any capital improvement is faster. If you reduce 100 watts and it costs a set amount of money – that payback will be faster the longer it is used. 24-hour operations in the common area can make paybacks 3-4 times faster a normal commercial space and make energy efficiency project very cost effective.
Second, the long operating hours also mean that the energy savings will be greater. This might seem redundant to the first point, but it is different. Verde believes in what we do, that reducing energy is important for our collective society to be undertaking. If we have the opportunity to work with a business and reduce 100W or 1000W, we get more excited about the latter. That’s just who we are.
Low-Income Businesses and Nonprofits
Low-income businesses and nonprofits in Chicago are often doing important community building in Chicagoland. We love reducing their energy, so they can do more of what they are doing for the community. Whether they are providing fresh fruits and vegetables to a neighborhood as a for-profit or helping connect kids to after-school programs – we are all stronger when they are spending more of their money on products and programming than electricity.
For the past 6 years, Verde Energy Efficiency Experts (previously known as Verde Sustainable Solutions) has worked with several hundred churches. There is a natural synergy with working with community places of worship, as they tend to (in general) believe in protecting the environment. They also understand that there is a lot of money available and that you often just have to be in the right place at the right time.
Unfortunately, churches often have low operating hours when they are stand-alone religious buildings. Often, we see a combination of schools, soup kitchens, or other community building and our combined effort on energy efficiency is deeper.
2020 Updates on Low Income Energy Efficiency
There is a new program for distressed public sector communities – the Distressed Community by Comed. This program focuses on utilizing labor available in towns, and provides free distribution of LED products. Ask the program, or reach out to Verde, to see if your community falls into the zip codes eligible for this program.
In 2017, Franklin Energy administers the pilot “Multi-family Energy Savings Program” to focus on reducing energy in the Multi-family building space in Chicagoland. This program is one of the rare partnerships between electric (ComEd) and gas companies (People’s Gas and North Shore Gas) in Chicagoland, and is an important pillar of the ComEd Energy Efficiency Program. Due to the overwhelming success of the multifamily energy efficiency pilot program among property managers, Trade Allies, and proven energy savings, this program is back for 2018 and expanded in scale and impact.
The Multi-Family Program is broken into two categories – market rate and Income Eligible. For this comprehensive program to work, the program must have access to within the units for the entire building to upgrade. Need some help from one of our energy efficiency analysts to help engage your building – hit us up!
Market Rate Multi-Family Program
Market Rate applies to any building that is non specifically subsidizing low-income residents. This would include all condominium buildings, as well as apartments that are market rate for their tenants. Often, the property manager or a condo board member is the right person to contact Verde about this program.
Income eligible, or low-income, are multi-family buildings that serve tenants that are low income. These buildings are not necessarily located in a certain geography, but instead have a focus on providing subsidized rent or services specifically for low income populations in Chicagoland. Property owners or managers are the best contacts for this, and we partner with Elevate Energy to deliver this ComEd rebate.
This program combines energy efficiency improvements in the common areas of multi-family buildings with the opportunities available in the apartments or condominiums in the building and may include:>
ENERGY STAR® certified LEDs
Advanced power strip
WaterSense® certified shower heads
Faucet aerators for bathrooms and kitchens
Hot water pipe insulation
Common Area Offerings
ENERGY STAR® certified LEDs
Exterior and garage LEDs
LED exit signs
2020 Program Updates
In 2020, there is a copay for T8 to LED conversations that are Type C. This is important, since this program frequently was oversubscribed and not available year round. There are times that a Type A (instant discount) offering would make more sense than a Type C, so get a free energy efficiency assessment to determine your best offering.
If you own and operate a business in Chicagoland, you likely fall into the Small Business Energy Efficiency Program, small business grants or rebates as a benefit that is available to all commercial customers. This program is one slice of the greater ComEd Energy Efficiency Program
in Illinois and is designed to help businesses move forward with efficiency improvements through rebates and incentives.
First – why would ComEd share rebates with businesses to help them use less energy? Isn’t that against their business model since they get paid for the electricity we use? While that is true that ComEd benefits from the greater amount of electricity that we use financially, they are also required by the Future Energy Jobs Act law to spend a significant amount of money annually on energy efficiency. Since 2007, Illinois has been collecting a tax on each residential, commercial, and public sector’s electric bill and spending that on energy efficiency.
ComEd, like most utilities, differentiates commercial customers by the amount of electricity drawn at any one instant. Unlike a kWh (kilowatt-hour), they do this by kW (kilowatt). I imagine this helps them stabilize the grid by understanding how many businesses are drawing large amounts of power at any instant, although this classification may have less importance today with the advent of the smart meter.
For commercial customers that are classified as Small Business (0-100 kW), they are eligible for the Small Business Energy Savings Program. Since this classification is about how much energy is drawn, and not how much revenue is earned – this can lead to very large businesses qualifying for this program (so the name can be misleading). Here is a list of likely candidates that will qualify for the 0-100 kW classification, but the only way to really know is to check on your utility bill.
This program has been designed to really encourage businesses to move forward with energy efficiency, with very generous incentives. I like to think of it as designed for organizations that do not have a person dedicated to evaluating investments to see if they make sense to move forward.
Target and Walmart likely has a whole team dedicated to evaluating LED lighting for their parking lots, stores, and thinking about how that investment can benefit the company. A small business does not – it usually has an owner that is stretched thin and makes most decisions. With large incentives that cover huge portions of the cost, it can make moving forward with energy efficiency a “no-brainer”.
The core offering of this program is a $.85 per watt reduced incentive on LED conversions.For example, a 4 lamp 4 ft T12 troffer is considered to have 164 watts in energy usage. If you install a 36 watt LED fixtures in its place, your incentive would be 164 – 36 = 128 * $.85 per watt reduced = $108.80 of incentive. In addition, they offer incentives on occupancy sensors, photocells, and advanced lighting controls. In fact, Evokits are the most popular product we install and include an additional $75 per fixture for daylight harvesting and occupancy sensors.
However, once you get past lighting, the program actually gets more interesting.
Refrigeration is a common energy hog for restaurants. The program incentivizes EC motor upgrades, as well as evaporative fan speed controls – which only make that fan run when the evaporative cooler is calling for cooling. This can combine to improve the efficiency on a shaded pole motor by 90%.
HVAC incentives are also very popular in this program, and there are incentives of up to $400 per ton to encourage folks to take their current rooftop HVAC unit and upgrade to a CEE tier 2 energy efficiency RTU. Since our most commonly replaced units are 10 tons, that is $4,000 on incentive. When you combine this with a DCV Economizer and Advanced Rooftop Controls, it can cover almost 50% of the new unit replacement.
A few products can be provided to the customer at no cost, and those are the following:
If you have not participated in this program before, it might be because it sounds too good to be true. Well, as an active trade ally for the past 5 years – I can assure you that it is true. In fact, I can assure you that your neighboring businesses have participated and even your competitors. Yes – your competitors might be using less electricity and having a competitive advantage over you!
One caveat – this program is run through a closed network of trade allies. You must work with one of these highly trained partners in order to receive these very generous incentives.
How do you find one of those partners? You already have – just give us a call.
In 2016, Illinois passed an ambitious piece of legislation called commonly as the Future Energy Jobs Act that aggressively expanded the ComEd Energy Efficiency Program. This act recently went into place in Illinois in January 2018, and with it comes a new certification for energy efficiency companies in Illinois.
The Energy Efficiency Measures Installer ” is a new ICC certification in town. Ever wonder if your company you might choose to do business is a fly by night company – possibly previously working under a different name and might not be trustworthy? The Energy Efficiency Measures Installer certification will tell you that the company has the proper business entity structure to do work in Illinois.
This certification is the responsibility of Program Implementers of ComEd, such as Nexant, DNV GL, Willdan and Franklin Energy to assure. While not the responsibility of the commercial customer or public sector customer receiving a rebate check, it is a good idea to check certification before getting started with your Trade Ally.
You can check your current Trade Ally on the ICC Website, or reach out to Verde Energy Efficiency Experts – as we were one of the first Illinois companies to get certified.
One of the most popular programs (it even won a big award this year!) in the ComEd Energy Efficiency Program over the past 10 years has been the Instant Discount program.Previously known as the Business Instant Lighting Discounts Program, the Instant Discounts program is designed to help commercial customers acquire discounted energy efficient projects without jumping through any hoops.
This program has been widely popular over the years, and contractors to property managers in Chicagoland have replaced a ton of lighting to LED via this simple program for ComEd rebates. Here are a few highlights for 2018.
LED Tubes are by far the most popular product in this program. This program supports Type A and Type B tubes, which I’ll describe below. If you are interested in Type C Tubes (new LED driver included), then you’ll need to participate in the Small Business Offering or Standard Energy Savings programs.
Type A – Type A tube replacements have a $4 instant incentive and usually cost between $6 and $10 without a rebate. This type of tube is designed to be used with an existing electronic ballast, so really you are just removing a T8 fluorescent lamp and installing a 10-17 watt Tubular LED product. Our preference these days is a 4000k 13W Philips LED tube for office settings, or a 16.5 W HO 5000k Philips LED tube for warehouse or manufacturing settings. Both are eligible for the $4 instant discount. Note that T5 Type A lamps have a $5 Instant Discount.
Type B – Type B tube replacements also have a $4 instant incentive, and usually cost between $6 and $10 as well. The advantage of this style is that the hot and neutral wires are directly wired to the sockets of the fixture, so there is no need for an external ballast or driver. While this keeps material costs down, it does create a bit more labor costs than a Type A. For this reason, we typically recommend Type A through the instant incentive program.
Screw in LED Lamps
Screw in lamps (PARs, MRs, BRs, G25s) have been the base of much of the savings in the energy efficiency world for the past 10 years. Today, while a lot of our marketplace are LEDs, there is still a lot of work to be done. If you have any of these lamps not converted to LED in your commercial setting, these are among the best ROIs available and are low hanging fruit. In fact, property management groups can save almost $5 per year by replacing a 13 watt CFL with a 9 Watt LED A lamp, and this is prevalent throughout a lot of multifamily buildings in Illinois.
Par16 and Par20 – $6 off
Par30 – $8 off
Par38 – $10 off
Mr16 – $3 off
Decorative (B12, B11, candle bulbs) – $3 off
Directional Reflector lamps (BR30, R20, Br40) – $4 off
Already sounding good to you? Shoot us an email to ask for pricing and quantities.
We absolutely love trim kits at Verde – they are very versatile and really improve the quality of light that comes out of a fixture. Trim kits typically replace a Br30 or the ever challenging PTL fluorescent lamps. They are typically a bit labor intensive, and while there are energy savings, this is more about upgrading the look and feel of spaces. The instant incentive for this fixture is currently $10, an increase from previous years and one of our most successful products.
Exit Signs are a great opportunity for energy efficiency, and as this former firefighter can attest, an important consideration for your building. Current LED products last up to 100,000 hours, which can avoid fines and safety concerns with exits being improperly lit.
Screw in LEDs (white and red lamps) are available with a $5 per lamp rebate
Hardwired LED replacements are also available with a $20 per lamp rebate. Labor is often higher with this replacement, but it is required in signs where there are currently PTL style lamps.
New to 2020 – HID LED Products
This year, ComEd has begun providing incentives for “corn cob LEDs” or HID replacements. While this product can be challenging to use at times to get a good light output, it is versatile and good for many applications.
Mogul Base (E39) over 100 watts – $55 rebate / lamp
Mogul Base (E39) less than 100 watts – $25 rebate /lamp
Standard Base (E26) – $20 rebate /lamp
$12/fixture under 50 watts
$20/fixture 50 to 99 watts
$50/fixture over 100 watts
$10/fixtures for Energy Star fixtures less than 40 Watts
$25/fixture for Energy Star fixtures greater than 40 Watts
Pin Based LED
$5 per lamp for 4 Pin-base LED
$5 per lamp for 2 Pin-base LED
Brand new to 2020 is an instant discount on high efficiency commercial RTU equipment. While not as significant as Small Business Offering incentives, it is an easier way to get new equipment at a discounted price.
Please reach out with any questions, and as Verde Energy Efficiency Experts is a 2018 Instant Discounts Distributor – we are happy to help you with any product purchases. Come pick up lamps at our warehouse today, or better yet, enjoy a free site visit from our energy efficiency analysts to make sure your product color temperature and wattage selection is right from the get go.
In my opinion, the most important player in the rebate game is the trade ally. A “Trade Ally” is a partner that communicates the efficiency program to the customer. In this case, we are talking about commercial customers, so businesses that use electricity and are eligible for rebates when they reduce energy.
Trade allies have a lot of requirements, and each program has their own levels of requirements for entrance. The utility programs often offer this form of distribution of rebates, as it is easier to educate a pool of 200-300 contractors, as opposed to educated 200,000 – 300,000 commercial customers.
The most restricted program is the Small Business Program, which is a closed network of Trade Allies. This means that any electrical contractor cannot just participate in the program – they need to respond to an RFP and be picked through a competitive bidding process. The benefits of working with these trade allies are higher incentives and a higher expected level of customer service. Verde has been a proud partner and trade ally in the Small Business Program since their 5th program year – please let us know if we can meet you for a free energy efficiency assessment.
< class=”hs-cta-node hs-cta-5c13cbcf-6481-4b92-94d4-2b09f9ba0df3″ id=”hs-cta-5c13cbcf-6481-4b92-94d4-2b09f9ba0df3″ style=”visibility: visible;” data-hs-drop=”true”>Schedule an Energy Assessment
The Instant Discount program also has a selected group of distributors that can offer their rebates and is not available to all companies. Verde is fortunate to be a distributor in the Instant Discount Program.
The Standard Program is open to all Trade allies that meet a minimum level of training in the energy efficiency program.
The Multi-Family Energy Savings program also has a closed network of trade allies, which are carefully screened for those that can work in common areas of multi-family buildings. Verde enjoyed participating in this pilot program in 2017, and have great hopes for the savings that can be found in 24-hour common areas. This program provides rebates in conjunction with People’s Gas and North Shore Gas Rebates and requires access to in unit improvement in lighting and reduced water usage.
The best part of the way this utility program operates is that if you don’t find a good fit with one particular trade ally, you can always reach out to more. There are lists throughout the program web information, or you can call and ask for a referral from ComEd at 1-855-433-2700.
In 2016, our legislature did the impossible in Illinois – they passed a meaningful law.To show how remarkable this is, at that time, Governor Rauner and the legislature had been in a budget stalemate for two years.This law passing required a compromise between a huge utility monopoly, a democratically controlled legislature, and a republic governor.
This law, commonly referred to as the Future Energy Jobs Act, provides the architecture for the ComEd Energy Efficiency Program in Illinois. It was a strengthening of an existing energy efficiency law in Illinois, which was passed in 2007. The FEJA act not only improved the state of energy efficiency in our state, but it also went further to include renewable energy (solar PV production).
How did this law pass at such a time of indignation and fighting in our state?There were two key words – jobs and nuclear.
There was a huge coalition the pushed for training and job promotion around the already successful energy efficiency program in Illinois.In fact, my company had grown from just myself in 2010 to almost 25 energy efficiency jobs today, and we are 100% built out of this ecosystem from this law.Clean Energy Trust reports over 100,000 Clean Energy Jobs in Illinois in 2018. In a state that had struggled to recover from the Great Recession, this was an important topic of conversation among both parties.Ultimately, this is what I think drove Governor Rauner to support this bill.
Illinois has long produced a higher percentage of their power from nuclear energy than a majority of states, with almost 60% of electricity coming from Nuclear power plants in Illinois.While this source of electricity creates no carbon, there is some large debate about the environmental impact of nuclear power.
Exelon is the parent company of ComEd, our local utility monopoly in northern Illinois.Exelon has long had an aggressive nuclear portfolio and recently has had financial constraints after the US has failed to address a carbon tax or cap and trade legislation as expected.Exelon had been seeking financial support from the state to keep two nuclear power plants open, and this law was the opportunity to negotiate those terms.
There were also the normal and expected players at the table that helped negotiate this law, including environmentalists (Environmental Law and Policy Center, Elevate Energy), Democratic and Republican Politicians, as well as black and latino representative groups.
The law increased the already $240,000,000 of annual spending by ComEd in 2017 to $1.4 billion over 3 years from 2018 to 2020.On top of that, there is a minimum of $180,000,000 of spending for renewable energy – strengthening and hopefully fixing our existing renewable power standards.
With any compromise – it isn’t perfect.However, I was personally surprised when this law passed and I feel that nuclear power is an important part of curbing climate change.If electric vehicles continue to penetrate the marketplace, we will need consistent nighttime energy production to charge those batteries, and maximizing existing power plants that do not release carbon is a great plan.In addition, the technology to offset usage to lower cost and lower usage times of day will continue to develop and nuclear power helps support those.
Did you know that Illinois has real-time pricing for residential electricity?Check out more information and sign up at ComEd Real Time Pricing.I’ve used it for about 2 years and have saved around 10% compared to normal pricing by doing simple changes like running the dishwasher and washing machine at night, as well as setting back the AC during surge pricing.
Commercial energy efficiency improvements are a core pillar of the ComEd Energy Efficiency Program in Illinois. All businesses and public sector programs are available to participate in the Standard Program for energy efficiency program.
While businesses that are rated 0-100 kW are eligible for their own programs for small business and small facilities public sector, they are also able to participate in the standard program for business energy efficiency if they prefer.
The Standard program is very versatile and does not require the usage of an ICC Certified Trade Ally to install the product. However, it might be helpful to purchase your products through an Instant Discount distributor such as Verde Energy Efficiency Experts to make sure the products you are installing are Design Light Consortium approved, as are often required for the incentives.
This program’s incentives, while lower than those targeting smaller facilities, are targeted toward larger facilities that often have a dedicated person to maintain supervision and staff on hand to replace lighting fixtures and advanced controls.
2020 Highlights of the Program include:
$.50 per watt reduced incentives for LED lighting, including Type C Tube and Driver installation
$ .18 per watt controlled daylighting plus occupancy controlled sensors
Made in Illinois bonus of 10% on any fixture that is at least 50% manufactured and/or assembled in Illinois
Opportunities for higher incentives for advanced lighting controls scenarios
$4 incentive per square foot walk-in cooler and freezer strip curtains
$60 incentive per EC Motor installed in walk-in cooler and freezers
$90 incentive per EC Motor installed with evaporative fan speed controls for walk-in cooler and freezers
$100 incentive per beverage machine controls
$50 per ton of new rooftop HVAC unit installed
$50 per ton controlled of economizer installed
$10 per bathroom exhaust fan sensor installed
$40-$75 per HP controlled Variable Speed Fan
$20 incentive per high-efficiency air nozzle
$100 incentive per no loss condensate drain
$75 per HP – Integrated VSD on a new air compressor
Want to know your specific eligibility and where you can save energy? Hit us up and schedule a free energy efficiency walkthrough, which will share a customized report with all of your eligible ComEd rebates.
We often get asked about how the Comed Energy Efficiency Program helps homeowners and create a more energy efficient home. While our company focuses on commercial, we like to point folks in the right direction. A kWh saved is a kWh saved after all!
There are several great programs for residential customers, and here are some highlights (and now to participate).
Illinois has some ambitious goals of installing smart thermostats, as they both save electricity and gas, and will also complement our commitment to smart meters. You can purchase a smart thermostat, like a Nest or Ecobee, on their online marketplace and receive an instant discount with very little hassle or paperwork. Installing this is fairly straightforward, and can often be done without the help of a trade ally.
Smart thermostats receive a rebate of $100 and not only help you maximize your scheduling for better performance, but it can also connect to your smartphone and have internal occupancy sensors to push even further savings when you are not at home.
There are two great ways to take advantage of LED lighting purchases in Illinois for homeowners and renters – either online at their Energy Efficiency Marketplace or at a local retailer (like Ace Hardware or Home Depot). Both of these options offer instant discounts and are designed for easy usage and little friction.
Energy Efficient Appliances
ComEd offers rebates on residential appliance purchases of the following amounts
Air purifier – $50
Clothes waster – $50
Dehumidifier – $25
Freezer – $25
Electric Clothes Dryer – $25
Refrigerator – $50
Room Air Conditioner – $25
Ventilation fan – $25
Water Dispenser – $25
Refrigerator and Freezer Recycling
ComEd will come and pick up your extra refrigerator or freezer and pay you $50 to boot. This has been one of the most popular programs in the energy efficiency program to date and is designed to keep folks from keeping an old refrigerator empty and plugged in just because it is hard to dispose of.
You also have the option to have someone come out and do an assessment of your home, based off of the popularity of the assessments done by Trade Allies in the Small Business and Standard programs.
Weatherization and HVAC
You can also now receive up to $600 for an upgrade to your residential AC system, as well as $300 for attic insulation and $400 for wall insulation. There is also money available for both duct and air sealing, which are important to reduce air leakage in older homes.
After you have maximized your options at reducing, its time to consider renewable power. You can purchase up to 100% green electricity from your power provider, or you can install your own rooftop solar PV system. While Verde does not currently offer this to our commercial customers, we hope to in 2018. Feel free to drop us a line and ask questions for your home solar array, as our analysts deeply care about sustainable solutions for our community.
Kevin Cody and Jamie Johnson discuss Agilux – a flexible and adaptable module LED platform with a ton of opportunities. Kevin and Jamie discuss international manufacturing, quality of products, as well as environmental impact of international shipping.
Jamie: Welcome back to episode 7 of the Verde podcast. Every week we talk to local business leaders and entrepreneurs to understand their real story that doesn’t make it to the spotlight, but is how actual businesses are actually built here in Chicago. Today we have Kevin Cody who is the founder of Agilux. I’ve known Kevin for many, many years. We’ve intersected in a couple of different ways and it’s been fun to watch how his product has grown because I’ve always been impressed.
Kevin Cody: Thanks. Thanks for having me.
Jamie: Glad to connect.
Kevin Cody: I appreciate we could get together again.
Jamie: Yes, it’s always a good time to catch up with someone who knows the pitfalls and glories of running a business, right?
Kevin Cody: It’s always fun.
Jamie: Tell me a little bit about Agilux and what you guys do as a business today and why and how you started the business.
Kevin Cody: Sure. In 2014, I happened to be at trade show for lighting and some other products, and for several years prior to that we had been selling and represent manufacturers of different products. We just had a real heart for the design process, for helping manufacturers bring their product to market. I have a background in retail as well as in manufacturing, and so I enjoy just seeing the whole development process in bringing a product to market.
We were representing manufacturers products and bringing them to market, and realizing that the manufacturers were really benefiting from our experience, and we decided that it was just time for us to go out and develop our own, and really get into the product development process and then own it all the way from start to finish.
Happened to be at a trade show and stumbled upon a product that I thought I would really enjoy potentially developing some derivatives of. Began a conversation with the product development manager who happened to be there in the booth and we ended up talking in the booth for about an hour about all the different options that they offered as a company, the variety of products that they did. I knew them from a previous industry and always had great respect for them, but the product that they were introducing to me seemed to be a little bit too commercial or a little bit too utility oriented, and it wasn’t a direction that we saw ourselves going.
I said this probably … He actually asked us if we’d be interested in selling the product for him, and I said, “You know, this really isn’t something that we think we would do very well for you at. There are other people who play in this sandbox that would probably do much better, but it’s an interesting product and I think that there’s a residential or a DIY version of this product that could at some point happen that’d be really interesting to have. If that opportunity presents itself, we’d love to talk to you further about it.”
At that, he invited me back to the company and invited me into their product development lab. It’s a major electronics company based here in Chicagoland area, and at the time I thought, wow, this is a neat opportunity because I’ll really get to see what a huge company does in the lab.
Kevin Cody: They said, “We have this product that we think has merit but we really don’t have a direction for it. We want to be in the LED space, LED lighting space because we know that’s important for all the peripheral products that we make and want to be involved in this, but it’s basically, it’s just a lab, so we’re not sure exactly which direction we’re going to take this but it’s a unique solution.”
We looked at it for probably four or five months and began to develop, just because of experience, some market concepts and possibilities. Began to talk to people about it, looked at all the options that we could potentially use in the product. We regenerated the discussion probably four or five months later and came to the conclusion that there were real opportunities for it and want to pursue it.
Jamie: Fast forward to today. Describe the product that came from that initial meeting and what you guys sell today.
Kevin Cody: Yeah, sure. The brand is Agilux, and it is an LED module, and there’s a lot of different forms that LEDs take today but this is something that can be magnetically attached to a power source and then distributed in a variety of ways. It can be moved around. It’s a super-low profile. It is totally different than anything else that’s on the marketplace today, and it is something that’s very flexible to work with from a product development standpoint.
Jamie: We’re looking at a few of your … You’ve got a couple of different in this conference room that we’re chatting in.
Kevin Cody: Yeah.
Jamie: It’s funny that I’ve seen it since the beginning and how it’s kind of evolved, and it’s beautiful, and something we obviously … You know us and people listening may not.
Kevin Cody: Sure.
Jamie: My company actually installs LED lighting for commercial customers, and I obsess over the size of LEDs, I do. From a logistical standpoint of how you get it from the first port of manufacturing to keep the environmental impact of shipping low, warehouse space low. You can actually deliver a lot more products to an individual customer when it’s … Your product hits all of those better than actually any of the product we buy right now.
It is a beautifully designed low-profile product and I know … Tell us a little bit about, I’ve heard some anecdotes that through beauty supply stores are really taking off and some of the larger I guess retailers you would say would have those kind of booth set-ups are really taking off.
Kevin Cody: Yeah, sure. We intentionally began to develop the product towards some non-mainstream lighting markets, channels, because we felt like we wanted to build a strong base of potential customers, do field tests and things like that before we introduced it to the mainstream market because the profile of the product is such that it really is unique to handle, and for an end consumer that walks into a DIY store today, they pick up a light bulb and screw it into their socket. This is something that’s totally different.
It’s very safe. It works identically in terms of the connectivity of the product but it is not something that anybody would just intuitively use in their home. We wanted to develop applications for it where people would get accustomed to it, that contractors would be able to install it, use it and be comfortable with it, that we could use those experiences for developing the DIY market in the future.
Two that we just kind of, three actually, that we picked to start with were the exhibit industry. The exhibit building industry typically uses a lot of unique applications.
Jamie: I bet.
Kevin Cody: They also need really low profile product and my history prior to starting the company was in manufacturing, selling and actually purchasing as a buyer at a major retailer, track lighting, and so I had a sense of where this could be used in those applications where track lighting was being used today and it was similar. It was natural for me to be able to go toward that market.
Exhibit industry is actually very large, and it is something that could build a nice base of business, so we started there.
Jamie: You know, what’s funny, what strikes me about your experience, and I’ve known you for a long time, is that when I was through my early start-up days, a lot of the teaching is around build a mobile product, it’s mostly software. Build something that’s very minimal, interview a lot of customers an adapt it, and I used a lot of that in interviewing and building our business model. I was very open. I didn’t have a lot of plans and it worked in a lot of ways. It’s challenging and you have one benefit I found is that I always wanted to stay in one space, so it never pulled me out of sustainability because that was what I was focused on.
Kevin Cody: Yeah.
Jamie: You’re one of the rare ones that I’ve met where you almost saw a vision, and it sounds like it’s from your experience being a buyer for so long, that you saw a vision for the low profile. We were talking a little bit earlier before we started the podcast about how the 24-volt, it’s kind of come around to be popular in the last six months, and you saw it years ago. I just wanted to notice that. You’re different than a lot of the entrepreneurs I interview and you’re singularly focused and the market’s coming to catch up to you, which is cool.
Kevin Cody: Mm-hmm (affirmative). Well, we’ve been very fortunate to be able to have a partner in the electronic side-
Kevin Cody: … that knows the same stuff, and had a lot of forward vision built into the product to get us to this point.
Jamie: You’ve got some patience too.
Kevin Cody: Yeah.
Jamie: You’ve not … I often think that a lot of my friends who have started a business and kind of moved on, sometimes I just think if they gave it another couple of years. Not everyone has that luxury in their life to do that though, and that’s not also the same story that if someone’s listening now and they just have an idea and run with it for 20 years, it doesn’t mean it will work.
Kevin Cody: No.
Jamie: Because there’s a lot of things that go on, but patience is definitely a big part of it.
Kevin Cody: Perseverance and a vision, and I think the vision is really what has kept us focused on continuing with this, because there’s been several times along the way that we said, “Is this really worth developing and spending and investing our saved income on?” Yeah, absolutely.
Jamie: If you don’t mind, expand a little bit on that. What was the most challenging time in the four or five years you’ve been with Agilux for you personally? What do you find to have been the point where you were like, “I’m not sure this is worth keeping at.” Tell me a little bit about that.
Kevin Cody: Well, there’s several pieces to the puzzle, and recognizing your strengths and weaknesses and surrounding yourself with people who are going to be able to support those, both sides, is really critical. Recognizing where the product has real opportunity and where it doesn’t, and then balancing cash flow with the requirements of product development.
We have a business already generating the cash that we need, so do we take money out of that business and put it into Agilux? Do we continue to invest in Agilux for the future?
As we talked about very early on, I had a vision for developing a product that we would be able to modify our current model of business with and really have something that would build equity into a company, and that’s where we continued to go back to. Whenever we have a challenge or a question about what we’re doing, is this right for the long term and is it continually worth reinvesting in? [crosstalk 00:13:56]
Jamie: You really serve almost like your own angel investor.
Kevin Cody: Yeah.
Jamie: Your existing business kind of funds the development and the research and the growth of Agilux.
Kevin Cody: Yeah, absolutely.
Jamie: That’s cool.
Kevin Cody: We’re working two jobs at once.
Jamie: Well, I’m sure you’re working twice as hard which is, that’s part of the game.
Kevin Cody: Yeah. It’d be nice at some point in time to have a real investment partner to come along with, but all the while you have to be developing a company that people are going to see a value in. We didn’t think that we’d be able to get there. In some ways, the product itself is so far out that some people would not be able to grasp it, and unless they really see the revenue that it could generate, they’re not going to get behind it.
Jamie: Really, an investment partner definitely comes with strings attached.
Kevin Cody: Yeah.
Jamie: It sounds like patience isn’t always one of those.
Kevin Cody: No. In this world too, there’s some big players.
Kevin Cody: They’re constantly, from a regulatory standpoint as well as just a technology standpoint, always putting up roadblocks to prevent smaller guys from coming in.
Kevin Cody: We realize that and need to have that perseverance and the vision to keep us going.
Jamie: Yeah, we talked about that. The DLC category of energy efficiency is probably just one of those ways that the big firms-
Kevin Cody: Exactly.
Jamie: … encourage to stop the smaller firms from coming in-
Kevin Cody: Exactly.
Jamie: … with new products.
Kevin Cody: Yeah.
Jamie: What are some of your favorite parts of running Agilux?
Kevin Cody: Realistically, I love product development. It’s kind of like building a house. You buy the sticks. You have a plan. You start to put them together, and in the end, hopefully, if you’ve built it on a strong foundation you will have something that you can call your own for a long time.
That’s the favorite part for me is taking a product from a raw beginning all the way through the end and using the experiences that we’ve had tremendously wonderful opportunities with throughout our business life into developing the product, into developing the package, into learning how to communicate visually to consumers in a way that makes the product appealing, and as different as it is, giving people a comfort level with their use of the product.
Seeing all that come together is really what excites me and keeps me going.
Jamie: How many different products have you developed at Agilux? How many different individual …
Kevin Cody: The core of the product is really the modules.
Kevin Cody: Those have not changed at all. We can always tweak the colors. We can always change the lumen levels, the characteristics of the electronics a little bit, but essentially it’s a modular LED and it’s always going to be that way, and that’s what Agilux means, agile light.
I don’t ever see it being a product that has a whole lot of variation to it. It’s a question of how do you mount it differently? How do you house it differently? Are there applications where you need to modify those things to accomplish the objective of whatever you’re lighting? The core of the product, the LED modules will stay the same. I don’t see that changing, but we have tons of opportunity in the other mounting options and form factors housing the product.
Jamie: I see one of those sitting here on the desk, the grow light.
Kevin Cody: Yeah. That’s was the third market we went after, which was grow lights.
Jamie: That’s indoor.
Kevin Cody: Yeah.
Jamie: Indoor growing facilities.
Kevin Cody: Exactly.
Jamie: I’m sure the marijuana boom has probably provided some opportunities.
Kevin Cody: Yeah. Interestingly enough, those growers have their ideas of how they want to grow product and have had some history with particular types of lighting that is going to grow their product better or best. They’re just like everybody else. Change is not something they feel comfortable with oftentimes.
Kevin Cody: LEDs are changing that in a big way, from an energy savings standpoint, obviously.
Kevin Cody: Also the ability to tune the LEDs to modify package of LEDs that is going to give you the best opportunity to grow the product the fastest.
Jamie: The plant doesn’t need visible light, right? It needs different wavelengths, the blues and the reds, I remember.
Kevin Cody: Yes, right.
Jamie: You probably know that better than I do, but do you have products that you take out the visible light and you, or do you-
Kevin Cody: Our product is designed around the spectrum between 450 nanometers and 660 nanometers and that is where plants typically like to grow. You could go above that and many will grow at 750 nanometers, and depending on the type of plant, microgreens for instance, want to grow or like it on the lower end of the spectrum, and flowering plants like it on the upper end of the spectrum, so more red as opposed to more blue with a microgreen or something like that.
There is the ability with our modules to be able to create the environment where people can grow exactly what they want with really great affordability as well as design their own to their liking depending on the type of plants you’re growing.
Jamie: Yeah. That’s great for the indoor gardener, for sure.
Kevin Cody: Yeah. It’s a nice low profile.
Kevin Cody: It’s not obtrusive in any ways or obnoxious in any way. It’s easily mountable in a lot of different variations, so depending on what you’re growing, where you’re growing it and how you’re growing it, those are all important things to everybody.
Kevin Cody: We have a lot of different variations that can be done with that.
Jamie: You almost open up an opportunity for everyone to have a residential basement greenhouse.
Kevin Cody: Yeah, sure. Sure.
Jamie: Sweet. I start growing … I’m a big gardener and I’ve always started to try and grow seedlings inside, and they always do fine. They get the moisture right and they get to a certain size and then they never … In the Chicago March, you leave them close to the window and they’ll die. I’m actually going to pick one of these up and give it a shot. I’ll let you know how it goes. We’ll get a follow-up podcast in the year.
Kevin Cody: Fantastic.
Jamie: Talk about how the garden turned out.
Kevin Cody: Yeah.
Jamie: Tell me a little bit about your experience in making sustainability a priority within your business. Obviously your product is a sustainable product, LEDs are. There’s no doubt. It’s pretty mathematical and it’s hard to argue.
What about internally? I saw a little bit of your warehouse. You guys have a much better inventory system than ours, which I’m going to go back and take some notes about. Tell me a little bit about you find and prioritize that within your own business.
Kevin Cody: The people that we’re doing business with, because the product, some of the product components are made in China, we have somebody in our QA within our China suppliers looking at all the things that those companies do to minimize any types of pollution or environmental issues that they might have. There’s a pretty broad, long list of things that we look for in suppliers that are going to qualify them in a way that we feel best suits our company vision, as well as just the total sustainability of the product from start to finish. That’s our power supplies. That’s our packaging. It’s our labeling. It’s everything.
Kevin Cody: We have a combination of suppliers from China to the U.S. and all of those are looked at the same way and held to the same standards. I think we have surrounded ourselves with suppliers that do the best job that they can at doing that.
Jamie: How do you weigh … I struggle with this personally, which is why I’m asking.
Kevin Cody: Sure.
Jamie: How do you weigh … Do you always ship by boat when you ship products from China, or do you air freight?
Kevin Cody: No, actually most of ours is at this stage air freight.
Jamie: Yeah, it’s light, small.
Kevin Cody: Yeah.
Jamie: Which is exactly why I brought that up earlier. That’s a big consideration for us.
Kevin Cody: Yeah. You know, one of the decisions for a core component of the product is the aluminum extrusion. One of the decisions that we made early on was that we could tool the product almost anywhere if we wanted to. We chose to have dual tooling in China and in the U.S. when we set up the aluminum extrusion that the modules magnetically attach to. When we did that, set up the cost analysis of what it was going to be doing it in China versus doing it here in the U.S., and preferably in the Midwest specifically.
We, in the process, discovered that in fact while labor costs are less expensive in China, you have freight, you have duties, you have all the other things that go along with that, the movement of the product from one factory location to another, potentially for different milling operation or painting or whatever, and discovered that we could move to a facility in Wisconsin called [Crystal 00:25:22] Finishing that does the aluminum extrusions, mills and paints all under one house, and they’re one of the best suppliers in the entire United States. While the costs were a little bit higher, we could actually save money, and freight, and fuel, and everything else by using a domestic supplier for the extrusion. That’s an example.
Jamie: Yeah. I have two points that I’ll bring up. The first point is the shipping is really hard for a growing business like both of us have to be patient and wait for something to take an extra month to get to you. Even if it’s cheaper, that month or it can get stuck in customs. UPS is pretty good at getting things by air, but it does kill me to do that, and we do about 50/50, and we’re really trying this year to push more towards boat because even though it is cheaper and we can buy more volume, but also the environmental impact is much smaller if you ship via freight by boat.
Kevin Cody: Sure.
Jamie: The other thing, and I just went to Shenzhen for the first time in November, and I know you’ve been to China many times in your career, I just had this really crystal clear vision, and maybe we can partner on this in a couple of years, but of an aluminum can getting used here in Chicago and recycled and down to pure element and then fed into a 3D printer to print a housing. While it sounds so futuristic, to see all of … We’d have to recycle that can here and to ship to China, as gas increases in cost and from an environmental standpoint I hope it does, that cost increases, and so the cost to do it locally here really does go down.
For me, it’s always been a challenge of inventory and how do you predict the future of what you need, and to be able to print something or really manufacture it much more in a lean model here in the U.S. which we haven’t had for, we just never have been good at it.
Kevin Cody: Yeah.
Jamie: The 3D printing model is compelling, especially with the LED that really just has a housing, a driver and a diode, are the three major parts.
Kevin Cody: Yeah. A couple of good points there. The fact that a 3D printer would allow you to create unique designs. If you wanted to be the Pinterest of LED lighting, you could do that pretty easily.
The other thing is looking at the difference between boat and air freight, also depends on the growth stage of your business. We’re at a point where a big spike in business could wipe us out, of inventory, and that was why we chose to keep and stay with the tooling in both locations. So far, we’ve been using Crystal Finishing exclusively and benefit from the ability to cut our lead times down.
Jamie: Oh yeah.
Kevin Cody: Significantly.
Jamie: You could drive out there and pick it up if you had to, right?
Kevin Cody: I did the last order.
Jamie: Did you?
Kevin Cody: Yeah. Also, the inventory levels by being able to turn our inventory a little bit faster.
Jamie: People don’t … I know you go to Wisconsin but people don’t appreciate how much is still made in Chicago. The breadth of it in the variety, Chicago has still got a lot of potential.
Kevin Cody: Mm-hmm (affirmative).
Jamie: We are still best in class in many different factories when it comes to manufacturing. I get kind of … I spend a lot of my time going on visiting a lot of manufacturing in Chicago and there’s still a lot that’s going on.
Kevin Cody: There’s a ton of lighting component manufacturers in the Midwest here, and particularly in the Chicagoland area, yeah.
Jamie: Good. I’ve, as always, enjoyed talking with you.
Kevin Cody: Yeah.
Jamie: Hearing your story and got to learn a little bit more about it.
Kevin Cody: Great.
Jamie: Thanks for being here.
Kevin Cody: Thanks. I appreciate it. Thanks, Jamie.
On Jan 15th, David Kelbaugh and Jamie Johnson sit down in David’s home on the north side of Chicago to discuss how and why he left a huge advertising firm in Chicago to build a boutique agency. With customers like Goose Island and Verde Energy Efficiency Experts, Tacklebox serves a wide variety of customers and focuses on building your brand.
Jamie and David discuss a bit about the venture capital scene in Chicago, and how it impacts growing firms customer development process. They also discuss the benefits of coworking spaces in early firm development, like 1871 and WeWork.
Jamie: Welcome back to week six of the Verde Podcast. Every week we talk to local business leaders and entrepreneurs to understand the real story that doesn’t make it to the spotlight, but is how actual businesses are built here in Chicago. Today we have David Kelbaugh, who is found of Tacklebox Brand Partners. Welcome, David.
David: Hey, thanks, Jamie. Good to see you.
Jamie: Good to see you again as always. I always like to start these stories, tell me a little bit about Tacklebox Brand Partners, how it started, what drove you. I know you in particular have a lot of big name brand agency experience, and what drove you to start your own company versus the path of growing in a bigger organization?
David: Yeah. That’s a good question. I think I’ve always known exactly what it is that I’m going to do for a living. What I didn’t know is if I would do it for a big ad agency or eventually start my own, and I love branding, love marketing because it allows me to use both side of my brain. As I worked at the larger ad agencies around Chicago, what I quickly learned was they look for well rounded employees that can use both side of the bran, but very rarely can you find a job where you’re permitted to use both side of the brain. The big ad agencies are so large that they have to have a process, they have to have rules and responsibilities. Everybody has their own lane that they have to swim in, and I kind of wanted to jump from one lane to the next because I love every part of this industry. I figured if I started my own company, I could allow myself to get into the lanes that I’m best at or maybe the lanes that I enjoy the most.
Jamie: How much of your time- How old is Tacklebox?
David: Tacklebox is about four years old.
David: I’ve been in the ad agency world for 15 plus, although I can’t believe it’s been that long, really. We started working with nothing but startups our years ago with the belief that I hired a team that really wanted diversity in projects and clients, and again, you don’t really get that at the big ad agencies. It’s like you’re going to work on Marlboro, you’re going to work on All-State, you’re going to work on Kellogg’s, and who knows? You may spend your entire career pushing nothing but cereal or cigarettes. The team that I’ve built around me didn’t really want that, so we’ve worked with I want to say close to 80 clients now in just four years, and that diversity really keeps us alive.
Jamie: And still today, do you still work with larger companies or is it all startups?
David: Yeah. We’re not actively pursuing the bigger companies, but we’re proud to call Goose Island a client, we’re proud to call Proctor and Gamble a client. Very recently a Berkshire Hathaway company signed on with us, so even though we’re not chasing them, they seem to be finding us, which I’m grateful for.
Jamie: Now that you’re running your own business, do you like the diversity of both the smaller and larger companies as clients, or do you long for a day where you could say no to the bigger clients?
David: I love both. I love the passion of a founder but sort of the textbook marketing perspective of a marketing director at a large company. It’s completely different. Founders oftentimes want their brand to be a reflection of them, and we can debate about the merits of that, but very rarely would a marketing director at a large Fortune 500 company want their brand to be a reflection of them. They’re in for making money, and it’s great to work with both of those types of clients.
Jamie: You do a decent amount of work with venture capital firms and other kind of startup ecosystem folks?
Jamie: Do you mind telling me a little bit about them and how they act? I would imagine they act more like a larger corporate client?
David: Yeah. Over the past ten years, I think venture capitalists have done a good job of beating very metric based marketing into the minds of founders and co-founders. Cost per click advertising, cost per acquisition, cost per lead, and I think when you do focus on that lower funnel type marketing that the venture capitalists have encouraged companies to focus on, that leads to a pretty strong disregard for your brand and sort of the softer side of marketing. But what you’ll find is if you do invest and if you do take the time to get your brand right, all of the lower funnel marketing metrics start to perform better. At one point when a company’s path was determined by its cost per conversion rates, now it’s that but now it’s also brand appeal and media coverage. I think this has been a very good time for Tacklebox to work with startups because it’s still metric and data based, but not as much as it used to be. There’s more to it than just cost per acquisition.
Jamie: So I know you know that I came out of 1871 with the first companies that were there, and we actually just interviewed Ryan from Revolutions recently, and that was fun to catch up with someone, because he’s gone through a little bit of funding recently. Last year I think they had a pretty decent sized raise, and we were talking before the podcast a lot of how that’s affected their strategy and their way for growth, and they’re accelerating their customer acquisition. Because they raised the money, they spent that money on customer acquisition, so they have grown in an amazing fashion. I just find this curious because I had a lot of friends of mine that would go through and raise money, and they were so elated that first day they got that funding, and then for the next nine months they were feeling pressure that I had never personally experienced because I’ve never raised money. From a marketing perspective, do you find the startups that are funded by venture capital or outside capital to be willing to take more risk and do more exciting things from a marketing perspective, or do they?
David: We don’t work with a ton of funded startups to be honest with you. We’ve worked with a couple, and I’m trying to think how my experience with them differs from the experience of the others. On occasion, those types will say, “Well how do I justify that to my investors?” So there’s a secondary. Any time we suggest that a client of ours undergoes a marketing initiative, they have to understand how to sell it upward, because on a weekly basis those investors are asking how’s the money being spent. There’s a little bit more extra work, I think, in working with a funded company. It’s good. It shows diligence, but that’s not something we have to deal with with non-funded clients. Other than that, I find there’s not that much difference in terms of risk threshold between funded and non-funded in my opinion.
Jamie: Yeah, I hadn’t mentioned this yet in the podcast, but we actually use you to do our marketing rebranding effort. We had a great experience, which is obviously while we’re still here talking, and a lot of what your approach was to interview our customers, which I thought was pretty brilliant. I would imagine, so what you just described, instead of going to the customers you’ve kind of got to go up, and that kind of would interfere a little bit with the process. That’s something I always, take it from a guy who never sought or got funding, so maybe I’m just jaded in my own way, but I always get worried when people spend too much time pitching their concept to an investor, which is a customer lost, instead of focusing on the customer, which is what we were fortunate to be able to do.
David: Yeah. Money raised seems to be now the holy grail for a company’s success. I sent out a tweet, I don’t know a few months ago, and I’ve been thinking about it ever since. I said, “When did the success of a company come to be measured by money raised instead of money earned?” It’s so funny. All the headlines are “so and so raises 80 million dollars from,” but we’re not talking about profitability. I guess a lot of that’s because private companies hold their profitability to themselves, so there’s not much for the press to talk about other than money raised, unless of course you’re a public company in which case profit and revenue is all freely exchanged, but I just guess being funded is a nice way to evaluate the success of your company, but I think that’s a metric that’s overrated personally. If you’ve seen the headlines, the bigger they are the harder they fall, especially recently. I’m like, this is like the best reality I’ve ever seen is the headlines on Cranes and Chicago Tribune. It makes for good reading, but I don’t know. We never raised money either, and it would make me really nervous to do it. I don’t like it.
Jamie: Right. I think I come from a similar place where it’s like I don’t like using other people’s money. I don’t like spending other people’s money, so I think I would’ve been a very terrible entrepreneur using venture funding, however if I do end up raising money in the future, I will delete this, edit this podcast, have that part removed.
David: Yeah. I think there’s, like, if you have a bunch of POs and you need to fund the manufacturing of something, sure, have at it, or a line of credit. I see benefits to that kind of funding, but eek, I don’t need too many cooks in the kitchen.
Jamie: Well, and I do see that there’s definitely a place in the world that capital is important, and we’ve grown through our line of credit where we max it out and it was very painful. We just had to be patient. We couldn’t grow as fast as we wanted about a year and a half ago, and I learned some lessons from that and it was painful, so I could see, especially when it comes to building something like software where there’s very little. You have to build a product and then the ability to execute on one additional customer, the marginal cost is pretty low.
David: Yeah, that’s true.
Jamie: But I think sometimes people forget that business comes down to revenue and customers, and when you get too focused on building this amazing product, you forget about the customers. That’s why I like your approach to marketing so much.
David: Good, thanks.
Jamie: We got a little bit off topic, but it was fun for me.
David: It was fun.
Jamie: I like to commonly complain about venture capital in marketing. What are some of your favorite parts about running your business over the last four years?
David: I think what I love is that I’m now in business producing a product that’s the single best way that I know how to help businesses. I’ve referred to myself as a one trick pony in a way. I cannot help raise money. I cannot help, the one thing I know how to do and the one thing I love to do is help companies show their face to the world in the right way. It’s really rewarding, it’s really gratifying, so I love to see that transformation from a company from what it was to a company that it is. I think there are so many companies that have great products, great services, but if their brand is not equally great or better, they’re never going to reach their full potential. There’s an inordinate amount of energy spent on perfecting the product, perfecting the service, and in my opinion, brand is more important than ever, so if you’re turning your back on taking care of your brand just as you take care of your product, I think you’re doing yourself a disservice. In fact, you saw our process, so you know that we build brands a lot like companies build products. We manufacture it, we test it, we refine it, we create a process or an operations manual to guide it, and then the rest becomes easy because the molds are in place.
Your brand now has a mod and it’s just a matter of manufacturing it and syndicating it through the channels that will help you reach your target audience. I wouldn’t go as far as to say that we automate it. That’d be nice, but you can’t automate the creation of a brand, but we do process it. We do build it a lot like a house is built or a product’s built.
Jamie: What’s your favorite part of the, you’re totally right. I saw your process. I can see how it becomes, it’s a playbook, right? You run it and sometimes you make a little few changes, but you come out with a good product over and over again and it’s important. What do you enjoy more, I’m just curious from knowing you. Do you enjoy the sitting with the customer and really closing the deal, communicating the value that Tacklebox Brand Partners brings, or do you like to go back after you get the customer interviews done and creatively whiteboard and just [crosstalk 00:14:26].
David: That’s a great question. Again, I think the reason I never felt at home at a big ad agency is because I like to do all of it.
David: I promise you, every single step of the way, I’ve built this company to be what I love to do, and I’ve been able to find people and hire people that love to do the same thing. I love it all. I probably am slightly more biased towards the new business at this point than I am the creative. Part of that’s because I have some people on my team that are better at creative that I am, so I’ll let them do the white boarding, and I’ll kind of come in at the 11th hour and help them understand the difference between the great ideas on the board and the good idea. What do you like to do?
Jamie: I don’t like operations. From our business, it’s really sales and then we have to execute on the sale. If I ever had to go over and start a new company, I always tell people this, do every part of the business but just myself, I would sell the concept, I’d go screw in the lights myself, I would do every part of it myself and not have the whole team, but now that we have the team, again, people that do it a lot better than I do, I don’t like the operational part, so I just like the new business and sales. I like talking to customers and hearing their pain points, because it evolves constantly and it’s a unique qualitative challenge to me, but the playbook, I get kind of boxed in of the same thing over and over again. I never liked that in any of my previous professions, so. We have a lot more customers. We could have a small customer with, we could go through five customers a day basically, which is much different, so that gets much more monotonous. It sounds like you’ve got 80 over four years, so 20 a year. There’d be a lot more. I’d probably be more inclined to be excited about that kind of business.
David: Yeah, right.
Jamie: Yeah, I definitely love new customer acquisition. It’s what I wake up thinking about every day.
David: Yeah, right, because it’s your business. You built the business both to make money, but also to be what you’re passionate about, and who wouldn’t want to convince others that it’s a beautiful thing to do, because it is? Absolutely. That’s great.
Jamie: What is the most challenging time you recall at Tacklebox?
David: Well, two points in our career. I think the first was just starting out when I had zero clients, zero sales. It was me in my basement with my laptop worrying about where the next paycheck would come from.
Jamie: Had you quit your full-time job at that point, right away?
David: Yeah. I had one paying client at the time, and I wasn’t really sure of myself at that point. I had no proof that what I’m doing actually works, so I had a hard time charging fair market value for my time. My wife was like, “How long is this experiment going to happen?” One client became two, became three, became four, so I kind of got over that nervousness, but it took six months I think before I felt like I really had something here, and I’d say the second hardest time is right now. I often refer to Tacklebox as the awkward tweenager. We’re kind of small but kind of big. It’s that scaling. Everyone talks about how hard it is to scale a business, because that’s when you have to make investments, and that’s when you as a founder have to let go and lengthen the leashes to your employees. It’s hard. it’s hard to figure out what that length of leash would be. I guess, honestly, back to our funding conversation, if I got a million bucks in funding, not that I’m looking for it, I think that would make my decision of how long the leash would be a lot easier, because I’d have budget to fund this person and this person and this person and this person. I could more easily put a staffing plan to a stable million dollar check than I could revenue that ebbs and flows. That’s the hardest part.
Jamie: Yeah, we have a similar issue where we get a bit cyclical, so last year there was one month we did over $500,000 revenue, and then we had a couple probably two or three months a different time of year that were more in the half of that size.
David: Wow, yeah.
Jamie: So my biggest fear today is hiring a bunch of team that I’d then have to let go. Sometimes that drives me to make really poor business decisions because of my fear.
Jamie: I could see how the funding would help you be like, “All right. I’ve got nine months of runway. Better spend it, and let’s go.”
David: Yeah, here’s your goals everybody. If you achieve these objectives, we’re going to be able to pay our money back to our investors, but there’s no black or white when you’re self-funded trying to scale.
Jamie: Yeah, scaling is really tough.
David: Well, you’ve done it well. You seem to be hiring.
Jamie: Yeah, I don’t know if I’ve done it well. We’ve done it. I’m not sure I’d describe it as well because I do let fear drive a lot of my decisions, and I have to let those go. I need to go see Yoda in the dark side somewhere to kind of let go of the fears that I have. Every year I get a little bit better where I have an experience to be willing to be like, “Okay. I know.” I was really worried in December and November about having a really slow time. We made things happen, and I have to have more confidence in the team and let that leash go a little bit longer and let them run and trust, and it is hard. It becomes your baby and it’s hard to let other people. I want to be a boss, or I want to be an owner that lets the team run, and I just kind of watch. That’s who I want to be, but who I am in real life is totally different, I’m sure.
David: Oh, I know. It’s so hard, and part of that’s because you spent so much time doing it yourself. I think the first, what, five years you were kind of a solopreneur?
Jamie: Yeah, it was four years.
David: Four years, so you know every little nut and bolt of how things are done. The fact that someone walks in with a nail instead of a screw to solve a particular problem, you’re like, “Um.”
Jamie: The only benefit I’ve got is I’m terrible at paying attention to details, so sometimes things, infrastructure builds around me without me even knowing.
David: That’s good.
Jamie: But I’m pleasantly surprised.
David: Yeah, that’s a good idea.
Jamie: Yeah. So I feel like we could probably talk for 20 more minutes about that, but I’m going to head into my last question for you.
Jamie: Tell me a little bit about your experience making sustainability a priority in your business and how you operate it? I know that you are a unique business where it’s very service-based and very people based. You don’t need a huge warehouse or a manufacturing facility or a kitchen, so how does that play out in your decision makings of running Tacklebox?
David: Yeah. I call myself a sensible environmentalist. I couldn’t see myself adding an hour and a half to my commute to reduce my carbon footprint a little bit, but at the same time, when I have the choice between taking an Uber or an Uber Share, an Uber Pool or whatever, I’ll do the Uber Pool. That’s a more sensible use of car emissions in my opinion. I’ll turn out the lights when I leave the room. My team and I, we looked at probably 30 offices of our own, and they all felt too big, and I think part of that was because it was the environmentalist in the back of my head thinking this is a lot of space for a team that’s five to ten people. One its biggest day, we’re only ten people, so that’s when we started to look into coworking. You were at 1871. We decided to go with We Work in the West Loop. The office is small, but it’s not more than we need. The lights are shared, the printer’s shared, the paper’s shared, and I’ve tried to think long and hard before I hit print as it relates to paper usage, which is not exactly something you guys work on, but when I have the choice between saving a PDF or printing it, I’ll save it on to my computer.
I’ve always, always been a big public transportation fan. I think despite its ups and downs, the trains and the buses here in this city are really well-run.
Jamie: Especially when you have a day like today when it’s snowing out, being able to hop on that train and not have to worry about the roads being slippery. It’s pretty incredible.
Jamie: It’s an incredible asset the city has that doesn’t get discussed. It’s just kind of thankless job the CTA does. Now, the buses aren’t always on time and they’re not great, but the trains run pretty smooth.
Jamie: When you’re at We Work, I’m curious if you ever thought about, because 1871 kind of had this number where once you got over five people, it was often cheaper to have your own space. Didn’t mean it was easier, because then you’ve got to maintain your own computers and printers and things like that. Is there a number of staff at Tacklebox where it becomes more cost effective to move out of We Work? Or you would still choose to stay there because of the benefits of shared?
David: The latter. I’ll tell you, I like it there, but my team loves it there. As a company of five to ten people, it’s hard to form a company culture, and that place, We Work comes with a bit of a company culture. It’s social, there’s things to do, it’s loud, it’s cool, so the younger people on my team love it. I wouldn’t want, I’d feel like I’m pulling the rug out from under them if I moved to save a few bucks. Not to say that it won’t happen some day, but I was talking about moving out of it right before Christmas break, and it did not go over well. My team loves it there, and I get it. It is pretty simple living. It’s almost like a retirement community for cool kids where everything’s taken care of. You don’t have to remember to order paper or coffee. It’s cool. We like it a lot.
Jamie: Well, the West Loop is great too because it’s that central hub. All transit is designed to go there, so you can’t have a bad commute getting there.
David: The one gripe is I wish there was less expensive lunch places around there. It’s hard to get a four dollar sub in that neighborhood, so I’ll bring my own lunch most days.
Jamie: Yeah, well, maybe there’s another startup idea there.
Jamie: Shared lunch spaces. Non-expensive.
David: Shared plates.
David: Yeah. But I will say this Jamie, if I had larger space and if it were space of our own, I would seriously put some thought into your approach to saving money as it relates to electricity, but the fixtures are kind of beyond my control at We Work, and I can’t really adjust the thermostat. I can’t do all the smart things I know that you know are good ideas unfortunately.
Jamie: But you could have a space with the most efficient lighting ever, and at We Work, even if it’s less efficient, if it’s shared it’s by nature more efficient. It’s counter-intuitive sometimes.
Jamie: But I’m sure since they have a usage, I’m sure they’ve probably put some good thought into it.
David: Yeah. I bet they have.
Jamie: Yes. Well, I appreciate you being with us here today, David, and I look forward to sharing this with the world.
Chicago Green Insulation’s warehouse, surrounded by barrels of foam insulation.
Tom has grown a successful enterprise that focuses on hiring underserved individuals in Chicago, such as the low income and those with a previous history of incarceration. Tom talks about how he believes in second chances, as well as how that has worked in his company’s success.
Jamie: Welcome back to Episode 5 of the Verde Podcast. Every week we talk to local business leaders and entrepreneurs to understand the real story that doesn’t make it to the spotlight, but is how actual businesses are actually built here in Chicago. Today we have Tom Decker, who’s the founder of Chicago Green Insulation. Welcome, Tom.
Tom Decker: Thank you very much, Jamie. I appreciate you having me.
Jamie: Tom and I have known each other for many, many years, and have followed each other along the entrepreneurial journey. I think we’re both still kicking, so that’s good, right?
Tom Decker: That’s it. There’s something to be said for making it beyond the two year mark, and then the three year mark. I’m at almost a decade in foam.
Tom Decker: What are you at this point?
Jamie: Verde’s about eight years old right now.
Tom Decker: So that’s why it’s such a similar path in terms of timing. I think I’m closer to nine than I am to ten, totally.
Jamie: Each year has its own wrinkle and ulcer that we’ve both inherited along the way.
Tom Decker: I keep a smile on my face because it’s fun. I also keep a smile on my face, when it’s not fun; because people don’t want to be around frowning, angry, miserable people, but entrepreneurship is the right pathway for me.
Jamie: I get that sense from the first time I met you that you were a trailblazer. So tell me a little bit about Chicago Green Insulation. Why you started it, what gave you the idea, and what motivated you to take it from an idea to an actual business?
Tom Decker: As I said, I’ve been in foam for somewhere between nine and ten years. When I got into foam, I was a sales guy. I learned the nuances, ins and outs, and all the technical stuff. I did that for two other organizations for about four and a half years. What was awesome about that is I really got the opportunity to help create, and participate in creating, alter energy efficient single family homes, multi-family homes, businesses. I got to learn a lot about the chemical manufacturers. I got to learn a lot about the equipment manufacturers. I got to know the movers and shakers, the peers, the individuals that when I grow up I want to be like.
And about five years ago, I sat up in bed one night and realized that I had neglected to participate in embracing the first 25 years of my professional life, which is something you and I’ve certainly talked about, but involving individuals with learning disabilities, involving individuals who have been rejected, either directly by society or who have chosen to be away from the rest of society because of learning differences and social differences and those sorts of things. So when I formed Chicago Green Insulation, I formed it from its outset to be a social enterprise to create employment opportunities embracing those individuals who’ve run afoul of the law, embracing those individuals who may not verbally or physically represent themselves as somebody that you want to be next to, but have a good heart and a good head on their shoulders.
Jamie: So going back a little bit, I know you said you were with two other foam companies. What kind of really drove you? Because sales people are hard to come by, and I’m sure you could have made a lot of money going to work for one of these other peers you admired, what really drove you to start your own company versus just-
Tom Decker: I was frustrated with the compromises that I was forced to make when I wasn’t the guy signing the paychecks. You know as well as I do that there’s a lot of stress that comes along with signing the paychecks; but you really get to decide where the can of corn goes in the kitchen, which drawer’s going to have the silverware in it, and where the stove’s going to be oriented in the kitchen. That’s what entrepreneurship offers you, the access to being with that total freedom and total responsibility. My wife regularly comments that it must be nice not to have a boss, and I respond, “I wouldn’t know.” And she’s like, “Well, you own the company.” And I’m like, “Yeah, and every client’s my boss. Every employee’s my boss.”
Tom Decker: So I don’t see myself as above them, and I also don’t want to ever neglect the value that I can learn and offer across the board.
Jamie: Yeah, it’s funny, I had a little bit of a different motivation. But I remember after I started the company, and we didn’t really do much for a year or two. We were doing some software things, which you remember. I remember Chuck Templeton talking about how entrepreneurs are often really terrible employees. I look back at all the different careers I had, and I’m pretty sure my bosses always hated me. You know, like I was a good employee in some ways, but not in the ways I was always bucking the system and creating problems. So it kind of felt good, once I could settle into that role of, “Okay. I’m an entrepreneur; that’s who, apparently I’ve been my whole life. I wasn’t just a bad employee. I just was kind of weird in my own way.”
Tom Decker: Square peg in a round hole?
Tom Decker: The residential camp where I worked for 15 years, Ramapo Anchorage Camp in Rhinebeck, New York. My mentor and the executive director of the camp, Bernie Kosberg, and I had a number of conversations about how residential programs, where you’re dealing with non-textbook situations and the answers are incumbent on a creative, thoughtful process that does not, generally speaking, lend itself to a correct answer on the first, second, third, or even fourth or fifth try. When you experience those sorts of things, and you understand that your reality is in your hands, I always said the Ramapo made great problem-solvers and lousy employees because we’re quick to identify what those challenges are, and the way that I very much believe, it forces us to be responsible for the solution as well.
That was Bernie’s rule. If you identify a problem, you own the solution. He was incredibly serious about soup to nuts. You’ve got to go out and figure out why it’s happening, what’s going on, what are the reasons that that was the way it was being done, and then why we need to go to option a, b, c, or d; and then, what you were going to do to make a, b, c, and d happen.
Jamie: Right, that kind of thinking doesn’t always fit into today’s corporate culture or where I came from, which is municipal government; because usually, you could even come up with a solution, they’re not going to let you do it anyways.
Tom Decker: Well, and that’s the conversation that I’m currently engaging with, with your old colleague, Tim.
Jamie: Oh, yeah.
Tom Decker: Talking about how you were incredibly adept at the adrenaline aspects of responding in a very kind and very competent and very professional way. And, that the organization was lesser as a result of you not being around though he knew in you that you were bigger than the whole that you were fitting into. So he knew you were headed on to bigger and better things a long time ago, he said.
Jamie: Yeah. He continues to say nice things, even though he shouldn’t, about me. What are some of your favorite parts about running your business? What is unique about your company? What is unique about your style? You already talked a little bit about the special attention you give to unique individuals and working them into your business model. So, what are your favorite parts?
Tom Decker: I love the hiring process that we’ve created. I feel like it’s unique. We offer paid interviews. So you make $13 an hour for eight hours, and the actual interview process is not a resume and sitting across a desk from myself or one of my supervisors. It’s actually a phone screen that covers the core competencies of what we’re looking for then, based upon the results of that phone screen, you’re invited out for an eight hour working interview. That eight hours is paid. If you make it through the first day, you’ll get invited to a second, a third, a fourth, and a fifth day.
The actual decision on whether or not you’re extended an offer of full-time employment is the crew, even if the most junior guy on that crew, the Friday before you came in on Monday, was his first day. The look in people’s eyes when I explain that the hiring is done by the crew, they’re amazed. Then you get that buy-in when it comes to their production and their teamwork, because there is no “i” in team. Your most experienced, your most senior individual, and your weakest link, you’re only as good as that weakest link.
Jamie: I’m going to steal that idea Tom. It’s a really … Because we actually do a sit down interview where we talk to them or go to a career fair, or often we go to a college where they have electrical graduates coming out of that program. It’s a brilliant idea. Because we can like them all day long, but if they don’t work well with the team then there’s no-
Tom Decker: Well, that’s where it came from. I had half a dozen different men, who I thought were just going to be rock stars, that didn’t make it to 10 a.m. on their first day. I mean three hours! Come on. This model really takes that off, and takes the pressure off. You have a gap in your resume doesn’t mean that you’re a failure and miserable. You have come through drug and alcohol treatment, or other sorts of challenges, doesn’t mean that you’re judged based upon that.
We certainly work to maintain a clean, drug-free environment, and everybody’s subject to all the drug testing and all that, but your shortcomings and failures don’t have to define you. We talk a lot about how the next several chapters of your life are going to be awesome because we’re going to collaborate together to deliver the finest spray foam insulation in the finest way. The other piece that’s unique is at the end of the job my guys pull out a stencil, and they spray paint onto the foam, and they sign their names the same way the individuals that created the Stradivarius violins signed their names to the inside of those violins, because I want them to have pride in something that no one in our lifetime may ever see again.
Jamie: Yeah, that’s true. That’s really cool. It’s nice to see you inspiring pride in work, because it’s not something that always happens today.
Tom Decker: Our mission at Chicago Green Insulation is by the year 2027 we want the city of Chicago to be the safest and most energy efficient city in the world, and I cannot get there by myself. I am only going to get there as a result of the community that I’m fortunate enough to be a member of and the changes that are going on; because the bloodshed that occurs on the streets of the city of Chicago today does not have to be what happens tomorrow. If every small business out there had one or two more awesome participants on their team, and those individuals instead of standing on a street corner could be at home in bed with money in the bank and a home that they owned, they wake up the next morning, put the kids on the bus, go off to work, and nobody dies.
Jamie: Yeah. We got quite a mess here in the city, and there’s not enough people trying to fix it, that’s for sure.
Tom Decker: Well, I think there’s plenty of people trying to fix it. I think that the ideas that are on the table are limited. One of my clients, his daughter worked for the MacArthur Foundation, and they did a side-by-side study where they dedicated several million dollars to mentoring, and after school programs, and all kinds of resources for one community and then nothing for the next community; and tracked what the outcomes were for various at risk individuals and found only a marginal advantage to the side that they put the money in. When they went back and dissected what happened and why it happened, it came back and said it’s not about any of those things. Those things are awesome. It’s about jobs.
Tom Decker: You got to have a job, and not just a job standing at a counter, which may, in fact, be what you want. Okay, then you need a job standing at a counter. But something where you can not only contribute in a high quality way, but feel good about yourself.
Jamie: I don’t remember the stats, but the unemployment of African-American men in Chicago that are in their 20s and 30s is … I remember it was staggering, whatever it was. Close to 50% I believe. And, that’s inspiring to hear business owners, or a business owner, thinking that part of the solution is providing good quality jobs, which is obvious; and yet, I don’t hear people talking about it very often.
Tom Decker: WBEZ did a study with the University of Chicago, and I’m going to be a little vague on the numbers because I don’t have it in front of me, but it was something in the neighborhood of 6,000 young men between the ages of 16 and 28 caused 90% of the violence on the streets of Chicago. Now, I’m not talking about employing those 6,000, I’m talking about employing those other individuals, so that those 6,000 start to see that there’s an option.
Jamie: Mm-hmm (affirmative).
Tom Decker: So, I don’t offer jobs to the ones that don’t want it, I offer it to the ones that want out.
Jamie: And then give them an opportunity, right? Yeah, that’s cool. Segue a bit, just to move on to keep it focused on … You and I have a passion for social enterprise, which we could talk about all day long, and we have. What is the most challenging time you recall in running your business? You know, the last years that you’ve been doing this, what stands out as the single most challenging time?
Tom Decker: How to get somebody to do something as well, or better than, you would. I mean, I’m pretty humble when it comes down to it. I’ve been lucky. I’ve got a good work ethic. I know a great community of people. I’ve certainly participated in creating those things, but finding salespeople that have that same level of enthusiasm and want to go out there and understand it. That’s the conversation we were having just before the podcast started. How to identify somebody who is going to have the technical savvy, as well as, the get up and go.
Jamie: It’s a big challenge, for sure.
Tom Decker: Yup.
Jamie: And we talked about where you find those people and how you motivate them properly; and there’s great sales people out there, but they’re making six figures for some big company, and it’s hard for us to pay that, for a small business to pay something like that.
Tom Decker: And then on the install side, I use the story of my buddy in North Dakota, who simply has the spray foam insulation done like the one I’m about to hand you here. His job for the last 25 years has been spraying foam insulation using a gun just like that one you’re holding. He earns $100,000 a year. He works four days a week. He works four 12-hour days. He gets four months a year off. He gets a car, health insurance, retirement, all paid for with no contribution required from him., and all he does is pull the trigger. So I don’t have jobs like that that I can offer, but when I start talking about somebody coming into this, there’s 500,000 jobs nationwide being created to install foam over the next five years.
Jamie: That’s crazy. I read a book recently. I’ll try to put a link up to it, but it talks about the growth of the business. In that, really, a lot of the business will ride the strengths of the owner up until a certain point. I don’t remember if that was a million dollars of revenue annually, or if it was twenty employees or what the metric was. But I’ve known you for a long time, your strength is sales. You can sell anything, and that’s the best quality of an entrepreneur, I think, in my experience, is to be able to communicate the vision and drive the sales because that’s what drives the business. Once you go to a certain point, though, this book talked about how then you have to rely on the owner stepping out of their strength, and that’s the even harder part, to accelerate.
Tom Decker: Right, and the owner stepping out of their strength or pairing themselves with others who have the strengths that you don’t have to allow you to continue to pursue that strength and mentor others into that strength.
Tom Decker: And that’s the transition that I’m currently in the process of working on.
Jamie: You kind of hire for your weakness in the beginning, and then after that, you hire to complement your strengths. They’re both hard, neither one is easy. Hiring people is not easy, and growing a company is not easy.
Tom Decker: If you go online and look at the Google reviews of Tom Decker, Chicago Green Insulation, you see all of these different people who have had me in their house. What I’m looking for is to get somebody that reports to me to have those reviews about them with the quality of the work done on the backside.
Jamie: It’s a challenge. I look forward to sitting down with you in a year or two and hear about the few folks you hired that replace that. So tell me a little bit about your experience in making sustainability a priority in your business, and how does it effect … We were talking a little bit about your Prius that you’ve had since the beginning of business. Just give me a quick read. I know you’re entire core value you offer customers is a very simple product, but internally how do you think about sustainability?
Tom Decker: I see sustainability and environmental stewardship, as well as economic opportunity, all tied together. We’re standing here in my shop around the corner from the Tesla dealership. I don’t drive or own a Tesla, not that I could afford one in fact, if I had the money in the bank. Not that I’d want one, if I had the money in the bank, or currently could afford one.
I see this as a modern, every person opportunity, because the foam insulation at market rate does a great job for single family homes of any size. Where I get most excited is where we can do this in a way that Chicago Bungalow is owned for $80,000 to $100,000 with a near net zero utility bill, and that individual at $13-$15 an hour starting out, going up to $20-$25-$30 an hour, is working for me or you or somebody else, so they’re creating generational wealth. So I see all of those things tied together, and I think we’re at a unique crossroads with the Obama Presidential Center coming and all the economic opportunity that, that’s going to create.
Jamie: Well, Tom, as always, wonderful talking to you. Thanks for being on our episode, and look forward to talking to you again.
In mid 2017, Verde Energy Efficiency Experts hired Tacklebox Brand Partners to do a deep dive on our brand strategy. After 7 years of growth through bootstrapping, we finally felt we could afford outside help to make sure our messaging was correct to our customers. The result of this work was a “manifesto”, or a ten page formal document that tells the story of who we are and why we do what we do.
The experience overall was incredibly positive, and I learned more about our organization internally than I would have thought possible.
We didn’t shop around a lot for a firm, but we did briefly talk to 4 different agencies to get a feel of style and approach. One of the members of our advisory board, Lorraine Herr, had seen David Kelbaugh of Tacklebox speak at an engagement at 1871 in Chicago. She has a marketing background and knew what we were looking for, and felt like they would be a good fit.
After working out the price and the expectations of the deliverable, we felt that Tacklebox was the right partner on this journey.
Customer and Employee Interviews
Tacklebox met with us and developed a plan of action, which included interviews with both internal employees and external customers. They summarized this qualitative data as a basis for our manifesto and reported back on our findings – from which I found an incredible amount of value. As an owner of a business, one thing I am constantly lacking is unbiased and unfiltered opinions.
Here were some highlights they found from their initial customer research.
What Makes Us Special
Customers feel that we provide a more accurate communication of the Commonwealth Edison (our local utility) rebates than our competitors.
Hard working and reliable, with immense knowledge of the industry to help procure the best money-saving rebates and options possible. Both environmental and affordable.
Able to show how being green can be attainable, even for small businesses.
How We are Perceived
Customers felt they could trust and depend on the company and its employees to get the job done, and well.
Many positive comments on the work ethic, personality and friendliness of Verde.
Clear to see the drive, passion, and dependability in the services that we offer
Hard-working and able to find the greatest savings and options.
Approachable and Responsive, which allows some clients to feel compelled to work with Verde due to its professionalism.
Earth-friendly and business friendly. Small businesses relate to and appreciate the ways which we work, even though their decision to work with us is often determined by ROI.
Great at encouraging a movement away from the past technologies (innovative in our space).
Areas to Focus and Improve
Many clients did not find us through internet searches, but rather by word of mouth, ComEd referral, or by our outreach. During our initial growth as a company, we felt that spending our resources on direct customer outreach was better than improving our website or social media. While this was likely the right course at our early stage, at some point we dropped the ball on improving this part of our interaction with our community.
The possible savings were usually the most important part of the transaction, not necessarily the greenness. We likely have spent too much time as an organization communicating environmental benefits, whereas the decision is often a financial one.
Being associated with ComEd as a trade ally did not deter clients due to their often negative connotation of the monopoly. Historically, we have often tried to steer way from co-branded marketing with the utility, as well as too large of a focus on the name ComEd. However, we were pleasantly surprised to learn that was only a positive relationship to our customers.
A larger reach on such platforms helps potential clients come across us naturally. Again, we had historically really steered away from this type of marketing spend in our early days. This feedback showed us it was time to revisit this topic.
Tacklebox found there was room to grow into the young, “hip” energy efficiency company. In our field, most of the companies are established contractors and focus on a really professional feel. Lots of polos, big trucks, and clipboards. We have an opportunity to really embrace a different feel – one that we were excited to hear since it fits into our company culture well.
Compared to Our Competition
They asked for a few competitors in our field that I respected, and then analyzed the marketing information available on those companies to give us some feedback on how others were marketing. I found this type of analysis helpful, especially to learn which competitors I respected didn’t have a great image from a novice customer perspective.
We have decided to make the Verde manifesto available to everyone both within and outside of the organization. While it is more of a guide for individual marketing and sales initiatives, as most folks will not take the time to look through a ten page document to learn about your company, it still has value in its completion.
The Manifesto does not have value by itself, but how we use it will depend on its success. That being said, just going through this experience did help us really get on the same direction as an organization.
How We Use it
The manifesto was described by Tacklebox to be a paint by numbers guide for all of our marketing strategies. It took a while to get the grove of using it, but we have incorporated the look and feel throughout our website, customer documentation, sales tools, and even our internal communications.
Even our social media, from our Facebook to our LinkedIn page, has reflective the wording, imagery and core of our new brand story. Do you notice that when you check those out?
Verde Energy Efficiency Experts
In 2010, we incorporated as Verde Sustainable Solutions, L3C. However, we have been referred to by a lot of names that are not often our actual legal names.
Verde Sustainable Solutions
Verde Energy Rebates
Verde Green Energy
We have recently rebranded to a DBA of Verde Energy Efficiency Experts, as the manifesto process demonstrated this was a better description for who we are.
I think this experience helped strengthen who we are – from how we interview and hire new employees, to how we handle customer service. It helped all of us come behind a common message – not what the leadership or manager thinks and feels, but instead, a carefully crafted core of the best takeaway of Verde from our customers and employees.
LED lighting has seen tremendous growth over the past several years, especially in Chicagoland, where we are supported by some fantastic ComEd rebate programs and incentives to help make LED conversions affordable. These rebates are a line item tax on all of our utility bills, and will lead to almost $400 million in incentives and rebates paid toward energy efficiency projects in Illinois in 2018. Yes, you read that right!
Outdoor LED lighting conversions took a while to catch up to interior LED options for a variety of reasons. However, you may remember noticing about 3 years ago the increased brightness of gas stations throughout the area. Gas stations were some of the first to embrace LED lighting canopy lights, as safer and more inviting places to fill up for gas actually drove more revenue for brand gas stations. Companies like BP and Mobile provided support for their individual station operators to upgrade to LED lighting, often using utility lighting Chicago rebates.
Most of our customers make decisions based on energy savings and ROI (Return on Investment), and unfortunately do not receive improved revenue with improved lighting like the gas stations. These Chicagoland businesses must make their investment decisions based on energy savings. However, we see a lot of unexpected benefits of our customers converting to LED, and here are a few.
Well lit parking lots are safer for both patrons and employees of businesses. One employee told us her 20 second walk to her car after the parking lot was upgrade to LED lighting removed a major daily anxiety event for her!
LED light has the benefit of being a directional light, meaning that pole lights in a restaurant will put the light on the ground below, with less light being cast about the general area. This can lead to improved light directly where employees and patrons need it – not in the ally or grass behind the parking lot.
Dark Sky Compliant
An increasing concern in our society is how we impact nature around us. The beautiful orange glow you see as you approach Chicago shows how much we have developed and built up our environment, but it also has negative impact on our natural species. Birds, bats, and others benefit from a darker sky, which LED can improve.
The dark sky compliant fixtures that we install provide more sustainable solutions than just energy efficiency. It can help our native species, our gardens, and provide safety without compromising our natural partners in crime.
Outdoor maintenance is just a pain – often expensive to get to high places, and often lights need maintenance in the winter when snow and sleet is common. It is also when light is most needed for a business, when the sun is setting at 4:30pm or 5pm. LED lighting contractors in Chicago that provide business lighting services are often expensive to contract, especially when lift work is included.
LED fixtures come with an incredible longevity – and if you replace the entire outdoor lighting at one time (hopefully in the summer!) you will find years of benefits. This leads to less maintenance expenses on the business – and more money for employee gifts (suggested an anonymous employee).
Less Vandalism Concerns
Glass fixtures and lamps can be easily broken with rocks, basketballs, or other means. Yes, basketballs in Chicago breaking outdoor lighting fixtures is a real thing that we see.
New fixtures can be housed in an durable housing, with little or no lens that can be broken. LED fixtures are often a durable plastic that are virtually impossible to break, unlike older metal halide and other HID fixtures. Even if the outer plastic housing outside is damaged, the LED will still continue to provide lighting.
No Ballast Required for LED Lighting
“Do I need a ballast for LED lights” is one of our most common customer questions. LEDs use a driver, and not a ballast, to drive the LED light output. Metal halide, sodium vapor, and other HID ballasts are notorious for not only high maintenance – but also a loud and annoying buzzing sound as they age.
LED fixtures have an internal driver inside of them, which can last 70,000 hours. With 8,653 hours in a year -that is a long time before maintenance will be required. Even if the light is on all night (half the year), the driver would last 14 years. Philips makes excellent drivers, although there are many manufacturers that continue to drive the market toward improved lifetime usage.
Combined with the right LED driver, a LED can smoothly dim from 100% to 0% light output. This creates some new options for outdoor lighting, especially when combined with motion sensors.
We recently completed a project for the catholic Archdiocese in Joliet that combined new LED pole lights with occupancy sensors, dimming the lights down to 10% when no one was present. This keeps some level of safety and security at all times, while maximizing energy efficiency.
Since the fixtures we installed were 100 watts, they were only using 10 watts a majority of the night. This took the original energy savings from 250 watt metal halides down another 90% further, when no one was in the parking lot.
One even further benefit – LED drivers are often limited in lifetime because of heat generated. Since dimmed LED lights create less heat from the driver than full usage, you will find an even longer lifespan on products with sensors and dimmed usage.
I recently had the opportunity to visit a lot of our international manufacturing partners in Shenzhen
China. Shenzhen is a fascinating town, one of the 14 cities with more than 5 million people. I was born in 1978, and at that time, Shenzhen had around 30,000 people. Today, the city has over 12 million and continues to grow at a staggering pace.
It borders Hong Kong, and was designated a Special Economic Zone> in 1980. Its location next to the metropolis of Hong Kong, along with its unique status by the Chinese government, has driven it to incredible growth. In fact, everyone I met had grown up in another area and no one had parents or grandparents that were born in Shenzhen that I met
I expected to see large smoke stacks and huge building cranking out large amounts of products in a single day. I expected a lot of poverty, as well as poor conditions for employees. I have dealt with Chinese companies for about three years, and had a lot of assumptions of what I would find based on what I have read and seen in the media. What I actually found was quite different from what I was expecting.
Almost all of the buildings were large 10-15 story buildings that were at least 10,000-20,000 square feet on a floor. Each of these buildings had a very minimalist feel to it, with crammed freight elevators and most folks taking the stairs. There were thousands upon thousands of these non-descript buildings, giving me a perspective of the enormous amount of product capacity of the city. Most of our manufacturers took up a single floor of one of these buildings.
There was less poverty that I expected. I lived in Nicaragua a bit in the early 2000s, and have traveled over much of South and Central America, as well as parts of Asia. I saw much less poverty than I expected, and far less visible poverty than I even see at times in Chicago. Everyone seemed to be busy, employed, and industrious.
In fact, one of my favorite parts of the trip was walking around the city at night, which had in incredible energy and bustle about it. Residents were shopping, eating out, walking, and it felt incredible safe throughout the evening.
For the most part, the working conditions seemed to be comfortable for employees that I engaged with. I didn’t see anyone under the age of 18, and all of the factories had a manager that followed us around during our tour. It felt more like concern of quality and image than big brother, although I don’t know how they felt as employees
Instead of manufacturing, most of the factories were really just assembling parts. LED fixtures contain 3 basic parts: LED Driver, LED Chips, and a housing. I did see manufacturing of drivers, and a few housing die cast of UFO style LEDs at one manufacturer, but most of facilities were more assembly than manufacturer.
International Export Companies
There was a large variety in quality, size, scale, and engineering capabilities of these firms. A few of the most impressive are featured below. There was one new potential firm, as well as one of our existing partners, where I found the quality to be…lacking. We won’t buy from them in the future, although there was not anything aggreidous that was visible.
Here are my top companies, and you will continue to see their products in our warehouse and installations for the next few years.
has been one of our longest running vendors, and they are on their 5th generation of retrofit kits that replace HID lamps, including metal halide, mercury vapor, and sodium vapor lamps. The retrofit kits are challenging to install without an electrician, but are highly versatile and have an incredible lumen per watt. They also feature a best in class MeanWell driver , and a 5 year warranty on their products.
They were great guests, with a group of employees and a welcome sign when I walked in the door. They gave a formal presentation about their company, their products, and we did a walk through of their facility. Green Inova does about $12 million in revenue, which seems impressive for a Chinese firm.
They also have an extensive product line that features controls for exterior lighting, both photocells, occupancy, as well as remote control driven sensors that have a variety of features. Most of the other vendors did not show as much engineering around sensors, which indicates a great promise for Green Inova’s future projects. I also had the opportunity to spend a lot of time with their engineers, expressing concern on applications of advanced lighting controls, as well understanding how their products work and best usage in Chicago.
One interesting note was that the manufacturing facility was clean, professional, and what especially interested me was that the sales staff seemed to know and engage with the entire manufacturing team. They seemed to be working as an entire unit, and even had an annual ping pong competition. Sadly, I ran out of time before being able to represent the US against their best player (that might not have been accidental)
Top Band was a huge company, publicly traded in Shenzhen’s stock exchange and with an annual $400 million of revenue projected for 2017. However, only about 10% of their revenue is from lighting, which is still significant in size compared to the other manufacturers that I saw.
Top Band has the most unique interior product line, including fixture troffer retrofit kits. They also have the best looking interior high bay fixtures, which is similar to the UFO fixtures in design. They also seem to spend a lot of time and energy on the aesthetics of their fixtures, and they manufacture their own drivers as well.
We have used Top Band products for almost 18 months at Verde. While they have not been great at shipment deliveries, I was very impressed by their facility and team and intend to increase our purchasing from them in 2018.
The seem to invest a lot in the aesthetics and designs of products, as well as They also have invested a lot into which is evident. Unfortunately, they do not have a great integrated sensor for their which is our favorite of their products, but it is in development.
Kingdom lighting was the most impressive of the new vendors. I was drawn there to see their LED fixtures with solar PV panels on the top. However, I was quite impressed by both their product line and their manufacturing facility.
The solar PV LED lights are very interesting, and especially have some great benefits that are not quite obvious. Many of our restaurant customers have issues with underground wiring below their parking lots, often leading to costs as high as $10,000 to dig trenches and repair wiring. However, solar PV LED lights have a battery that captures energy during the day and can power up to 80 Watt LED lights for up to 12 hours at night. The only downside to these fixtures is that as of now, batteries need to be replaced every 3 years or so, depending on usage.
The rest of their product line was impressive – with a huge variety of UFO style high bays, as well as new high bay innovations that were both cost effective and pushing the limits of lumens per watt (as high as 160). They also offered both a premium and lower end version driver in all fixtures.
Kingdom employees also all seemed engaged and interactive with each other, a key indicator for quality in my opinion.
Chinese vs US Manufacturing
While Chinese manufacturing has gotten a bad wrap in terms of quality, we have not seen issues first hand with this. Since we offer our customers a 3 year labor and material warranty, as well as a 3 year monthly payment plan as an option, quality is very important to us. We will continue to visit and keep a close relationship with our vendors, both within the US and overseas, to make sure the quality is high.
Inventory is a huge challenge for a growing business, and I have been surprised to find that it has been harder than I expected to manage in my growing enterprise. Too much inventory on hand – it ties up cash flow. Too little inventory on hand – customers get angry and it also ties up cash flow.
I’d like to share my experience on this topic and hopefully help someone avoid some of the mistakes that I have made (although I am a firm believer that the experienced lessons are stronger than any other form – so don’t be afraid to make mistakes as they make you better). I also find this important internally, as I recently returned from a visit to all of our vendors in Shenzhen, China.
I imagine that tied up cash flow in any business is a challenge, but it is particularly debilitating for a growing enterprise. I have found the best solution for Verde is to really stay on top of our cash flow is with our Line of Credit from our banking partner, and we currently use Kurt Wheeler from MB Financial. You have to find a banker that shares your vision for growth, and really take time to understand your business and how you operate. We have tried a lot of banks to this point, and while I philosophically wanted to bank with a small bank – MB has been ideal in helping us grow and increasing our LOC before we need it.
Letter of Credit
MB has also introduced the idea of a Letter of Credit to us, which shows a lot of value in international import to the US. Overseas firms can charge 30% at the time of order, and 70% at the time of shipment. Since an order can take up to 60 days to arrive by boat (35 days is average for us), this can mean a business is outlying cash 3-4 months before the material arrives. If you are a fast growing business, this really provides constraints around cash flow, even if you are getting a great deal on overseas products.
Chinese firms charge this up front fee for several reasons, both for their own internal cash flow as well as concern about US firms not paying once the product leaves their facility.
However, a Letter of Credit will address both of those concerns. Since the US bank is guaranteeing payment, it lets the Chinese firm “borrow” on that cash before it actually arrives. It also provides security to both parties that the payment will be good and allows for greater trust.
I find that our two largest manufacturers from China, Green Inova and Topband, both are large companies that have been in manufacturing for 10 years or more, and really have a high level of quality in their manufacturing. They both find the Letter of Credit to be a rare requirement from a US importer, but both see the value of it in providing a deeper partnership and trust.
First, I’ll start with some experience we have around keeping proper inventory around.
As I said, too much inventory ties up a ton of cash. We have a great product from TopBand that replaces a 2×4 troffer with a new LED fixture. The best part is that it uses the existing troffer structure, leading to less waste overall and an incredibly fast installation. However, it can be incredibly hard to forecast out 4 months in advance to know how many of that particular fixture will be sold. Introduce several color temperatures and wattages, as well as 2×2 fixtures, and you’ve got a real challenge on your hands.
We have both sold what we have on hand (after a large delivery arrives), as well as tried to order based on forecast. To be honest, neither has worked particularly well. We have also tried ordering a steady supply monthly, with the expectation that we could increase or decrease after some time based on inventory numbers in our warehouse, and that didn’t work either. Three months our orders arrived within two weeks of each other, so instead of getting 200 at a time over 3 months, we received 600 within two weeks.
I have learned that sometime, less expensive inventory is not the right answer, even if the cost is 30-40% of the cost of US branded products. It all comes down to someone taking the risk of paying for the manufacturing, and storing it in the US in warehouses (yours or your vendors). Since the LED market in particular changes so rapidly, with 200 lumens per watt on the horizon, no one wants to take this risk.
Some of our product line, specifically High Bay LED fixtures with sensor built in, can take 45-75 days to arrive after order. We don’t have to pay for the product until Net 60, which is a huge benefit, but this forces us to reevaluate how much we stock of those fixtures. In some of these fixtures, equivalent Chinese manufacturing can save 75-80% off the cost, making that decision to pay and import from overseas much easier.
There is basically a rule of thumb that you can get two of three of the following: quick speed, low cost, and high quality. You can likely get two of those three from one vendor, but you’ll never get all three. Your cost to borrow money, as well as the speed in which you need products, will likely dictate those.
LED Fixture Quality
Interestingly, almost all LED components and products are manufactured in China or Asia, despite the manufacturer’s name on the box. As you get to know different products, you’ll see that they all steal from each other, or purchase the fixture exterior, driver, and LED chips from other vendors, eventually assembling them in their facility. In fact, most of the facilities that I have visited were a single floor of a 8-10 story warehouse facility, where they assemble their products and ship them out.
Quality of the facilities that I visited did vary greatly, however. One of our manufacturers, Green Inova, had a pristine facility and very high quality of process and engineering. In fact, I noticed that the sales team walking around with me had a personal relationship with many of the factory workers, and it was no surprise that they have consistently outperformed all other manufacturers in regards to LED or driver failure. In fact, we don’t have a documented case of a fixture failing after installing thousands of their fixtures.
We did find one manufacturer partner that always had great pricing and a US warehouse, but their quality has been inconsistent. When I visited their manufacturing facility , I found that it was not well run, and had no consistency in what products they were manufacturing. In fact, they didn’t even seem to be making the products that they actually sell, which led me to believe that they were using other manufacturers to make majority of their products. We will no longer be purchasing from them, as the transparency is important to me.
When you find a great vendor, I think that it justifies taking a larger risk on their inventory, since the quality is high and the product will continue to be sold with confidence by your sales team. Good inventory is always less risky than bad inventory.
Fixture (Product) Size
I think about this way more often than most people in my position, as we have historically had a lack of space in our warehouse. We have doubled every year in both sales and inventory volume, and we have also doubled in warehouse size for the past 4 years in a row. However, the timing is not ever smooth and we constantly run into space issues. We always value size of our products in how much inventory we take up. One of the benefits of LED evolution is that sizes continue to decrease.
We currently have about 2,000 square feet of warehouse, which is not a lot, but we do have as much height as we would like as our old Chicago Warehouse building has a gigantic crane and 30 ft ceilings. Smaller products are less of a challenge for us to store. We could purchase 1,000 A19 LEDs, and they would take up the same space as 20 High Bay Fixtures – literally.
Large US Manufacturers as Partners
Our current preferred US manufacturer is Philips. They simply have the best drivers, a great brand, as well as top of the line sensors and advanced controls. Advanced controls are a huge challenge to do well, and often cost a ton of money to commission (or install and program). Philips allows you to do this with a remote control on their spacewise products, or an android app on the EZ Sense controls, so we have trained our installers and analysts to excel in this skill.
We have purchased from TCP, Lithonia, Cooper, Archipelago, and Jarvis Lighting, and feel after all of these years of operation that Philips has the best product. They don’t always have stock easy to get your hands on, but their quality and pricing is better than any other combination. Again, the old adage is you can only get two out of three – and I’ll take quality and pricing over speed in most cases, especially if I can address the speed through our own internal inventory.
We recently took a large inventory of the Philips Fluxstream with built in daylight harvesting and occupancy sensors, because those products had a good price, did not take up a lot of space relative to other products, and had a long lead time. It made more sense to stock up and let the sales team benefit on the quality of the product and its benefits, as well as the high rebate available from our local utility, so we could install as soon as necessary for customers.
In fact, I just had the (rare) pleasure of spending the day at an install with our team while we installed Verio Graphics, where we installed 11 of these Fluxstream fixtures replacing a variety of metal halide and T12 fixtures. After we were done, the space looked brighter, used less energy, and could not have been completed by our deadline for the utility incentives if we had not ordered the inventory back in September.
Bulk purchasing is seductive – I have made my fair share of mistakes over the years. I find that you end up selling what you have, instead of what is best for the customer, when you have large inventory of specific products on hand. In fact, often bulk pricing is available toward the end of popularity of products, which I have noticed that some of our competition will stock and push for customers.
I still remember my first bulk purchase, almost $20,000 of inventory, which was delivered on Jan 2, 2014. Three days later, our local utility rebate ran out of money and was suspended until June 1st, and I was forced to hold onto that inventory for 5 months. During the next 5 months, we didn’t lay off a single employee, but that decision to invest in inventory really made that more challenging than it should have been. I’d invest in people over inventory, and once you buy that inventory, you often can’t return it.
We have made numerous bulk inventory purchases since that date, often getting steep discounts from manufacturers to do so. I encourage new businesses to take small risks and experiment, but keeping a good deal of caution in your approach. I have learned to take larger risks on our most popular products, like this Cooper occupancy sensor, which has a technology that is a bit more stable and predictable. We generally aim to have inventory on hand for no more than two months, but this type of product that is so commonly used by our customers, is easy to purchase in bulk with confidence. It also uses us very little inventory space, which is an added bonus.
If your inventory depends on international shipping, which a portion of our does, this is a key consideration for inventory solutions. After all, inventory will not be in your warehouse until you receive it after it is shipped properly.
We currently use Astomar Logistics to help with our importation of international products. While we have done both in-house importing, as well as used the logistics of our suppliers in the past, having a US firm that knows logistics has been a great safeguard. They might cost a little more (although I find that they are overall cheaper than other options often), but can help in the time of an issue.
Customs and international shipping are easy until they are not – meaning that you can import 25 shipments without an issue, but the time inventory is paid for and “lost” for 3 months is the one that will haunt you. Trying to deal with language barriers with China, especially around an issue that is out of the hands of your manufacturer, will be a nightmare without the proper support and plan in place. I don’t feel that this is one place to skimp on professional services, even if it adds to the cost of the material.
Air shipping is a viable option for small and light products. We currently air freight about half of our Chinese made products, as they arrive about 20 days faster than container shipping via ocean. All things being equal, I prefer cargo container shipping, as there is a lower carbon impact of this style of shipping vs by plane. However, sometimes speed is essential and is offset by the higher economic costs of shipping by plane.
We have tried several types of forecasting, and in general, I am not a big fan of forecasting.
We have tried forecasting based on our previous 3 months of sales history (quickly changing product line made this unsuccessful), ordering products based on confirmed sales (led to long wait times and upset customers), and trying to order two months of expected inventory (also unsuccessful as led to too much inventory across the board).
We are currently using a complicated process that looks at our main products and over supply those that have long lead times. Any products that arrive quickly and are rather inexpensive, we are decreasing in our
We also are trying to decrease our number of SKUs. We sell a lot of LED tubes, as they are often a great offering to our customers. We offered a 14 Watt Philips tube as well as a 16.5 Watt Philips High Output that is slightly more expensive. We offered 4000k and 5000k for color temperature of both products. I recently decided it made more sense to only offer the 4000k in the 14 watt, and the 16.5 watt in the 5000k, as someone that wanted more light output likely wanted a brighter color as well. This may not work 100% of the time, and we may occasionally need to order a couple dozen 5000k 14 watt TLED tubes, but it has helped our strategy.
If you offer more options to customers, it may not actually lead to a better customer experience if it leads to longer wait times.
Finally, one important lesson that we learned this year was invoicing times. We often have projects completed, but not finally invoiced, for several days. When we started tracking this number, the median was as high as 4.5 days in certain months. This could be due to many issues, including long lead times on certain products, overscheduling, resolving scope of work questions, and a myriad of other issues.
After tracking this, we were able to cut this down to 1 day on average (or median). It is amazing how much this has improved our operations, as inventory challenges are all about cash flow. Improving the process after the install actually helped free up cash for taking slightly stronger positions on inventory, which in turn sped up invoicing. Tracking this to better understand it, eventually helped us find and make improvements.
In my energy efficiency firm, we mostly focus in terms of ROI on energy efficiency regarding lighting, refrigeration, weatherization, smart thermostats, and computer management. However, HVAC systems are much more complicated, and most of the considerations on whether to repair or replace fall into the new equipment warranties and repair – basically how much future maintenance costs are avoided by replacing an entire unit at one time. So instead of simply focusing on ROI, our customers focus on maintenance and other factors than just energy savings. Here are 9 that you should contemplate, hopefully before your rooftop unit heat exchanger goes out in the next cold spell.
1. Your Unit Needs Expensive Repairs
If you are due for a new heat exchanger, compressor, or anything significant to keep your unit running and your customers and employees comfortable, it is obviously time to weigh the cost of that repair vs a complete replacement. Unfortunately, that choice often comes in an urgent time, like in the middle of a cold or hot spell when your customers will suffer with any delay in service. In this case, the ROI must be calculated quickly and usually tends toward repair in an emergency. The best way to avoid this sunk cost of repair into an older unit is to plan for a replacement in a shoulder season (spring or fall) to avoid an urgent repair.
2. Your Unit Lacks an Economizer
Economizers are an amazing feature on rooftop units – they bring in fresh air when it is cooler than inside (when the thermostat is calling for cooling) or it is warmer outside (when the thermostat is calling for heat). While this seems like it would rarely happen, it is frequent for restaurant kitchens with tons of cooking heat. I’ve been on hundreds of McDonald’s roofs in the late fall or winter, and it is not uncommon to have the air compressor running on a day that is 50 degrees.
A well tuned Economizer will open in this situation, and bring in fresh 50 degree air instead of running the air compressor to remove the heat from the many grills and cooking units in the indoor area. If you lack an economizer and have a kitchen, you should consider replacing your unit with a new unit with an economizer.
3. Your Economizer is Not Functioning
In the case that you have an economizer but it is not running smoothly (and this is incredibly common), you should consider repairing your economizer with a reputable HVAC company and get your unit back to its designed condition. However, it is common for HVAC technicians to not fully understand how economizers work or how to repair them, and then will solve the problem by keeping the economizer permanently open or closed. This will either defeat the goal of the economizer, or permanently let in overly hot or cool air and significantly increase your energy costs. For this reason, make sure to talk through this with your HVAC contractor before you call them out, so you are sure they are comfortable working on this type of equipment.
4. Utility Rebates are Available
Incentives are likely available for your commercial property if you replace your existing unit with a more energy efficient version. In Chicagoland, we receive incredible utility incentives for early rooftop unit replacements for “Small Businesses” classified as 0-100kW peak usage on their electric bill. Those customers receive a rebate of $600 per ton for CEE Tier 2 energy efficient units. This is a significant rebate and can almost cover the cost of a new unit, significantly shifting the ROI for a new replacement. Larger commercial customers (100kW and above) still receive a rebate of $100 per ton – helping to push the ROI to a shorter time period on a significant investment.
In this scenario, it is time to replace your unit for a top of the line unit. New energy efficient units can save $900 to $3700 per year in energy savings, and if you are looking to invest in your business for the long haul, replacing your unit for energy savings will lead to great returns on capital.
6. Your Space is a Low Usage Facility
If your business rarely needs air conditioning and heat, then it is likely better to simply repair your unit. Find a better way to invest your capital, like in motion sensor for lights or smart thermostats to better monitor and control your HVAC system. Low usage means that your unit will not be needed as often, making the ROI on a new unit longer and less likely.
7. Your a property manager or building owner bringing in a new tenant
Leased property tenants are often responsible for taking care of their units, and rarely take proper care of the equipment. New tenants taking over spaces are often concerned about existing equipment, and there are frequent complicated terms in a lease and their negotiation.
We have found many of our property management companies take advantage of the generous rebates to replace the HVAC system for their new tenants as a part of the lease negotiation, leading to a win win for the property manager and the tenant. The tenant is more likely to stay in the space for a longer time period, and the landlord gets their contribution to the new lease covered by 20-60% by the utility rebate.
8. You Want to Do Your Part for Environmental Stewardship
In this scenario, you should replace your existing and go for the highest efficiency rated unit that you can find. Since space heating and cooling is the number one usage of energy in commercial spaces, it is the best thing you can do to be green in terms of long term investment of your physical building.
9. You Have a High Occupancy in Your Space
High occupancy can lead to high CO2 inside, potentially leading to suboptimal conditions for tenants. For this reason, new rooftop units (RTU) by code are often required to have CO2 sensors integrated to their economizers. If your building has high occupancy, like a movie theater or other dense office space, a CO2 integrated unit with an economizer might make a replacement the right option for your building.
There are lots of sustainable solutions that you can do as a business owner. Most of the decisions do not solely get based on what is good for the environment (and that’s OK), but instead what removes pain points for a business owner. Here are a few common approaches that I see our customers undertake and why.
While one of the most common energy efficiency services, LED lighting removes a pain point that is not exclusively high energy bills. Older and inefficient lighting has to be more frequently, while LED lighting can last over 50,000 hours. I know that a business owner will be eager to upgrade to LED lighting when they have a high percentage of lights out – this tells me that they may not have access to the tools and staff that can address burnt out ballasts and lamps. LED lighting incentives available from the ComEd Energy Effiiency Programcan help offset the costs to replace older lighting.
Walk in cooler and freezers use a huge amount of energy in restaurants and can cause a high electric bill. However, that isn’t the main reason that we see many of our customers jump on EC motors. While EC motors do use a fraction of the energy of the original shaded pole motors, using utility rebates to replace your entire cooler and freezer motors to Electronic Communicated motors avoids the fear that a motor will stop working in the middle of the night. Older motors are a constant source of maintenance, and new motors likely will last 10 years or more without repair. Nothing keeps a restaurant owner up more at night than a failed Walk in Cooler or Freezer, since so much of their ability to serve their customers are perishable and stored inside that unit. If you have walk in coolers or freezers, lets talk about how the ComEd Energy Efficiency Program just increased their incentives around EC Motors.
Have a cold employee that sets the heat up to 75 degrees, and not only is a ton of energy being wasted, but customers could be too warm as well and not stay as long to shop. Having access from a Nest or Ecobee Smart thermostatfor commercial spaces can really make a difference when it comes to keeping an eye on the business from afar, and making sure customer comfort and energy savings comes first.
Rooftop HVAC Unit Upgrades
Many of our customers upgrade their HVAC rooftop units to Tier 2 energy efficient units. While the energy savings are significant, the main motivation is removing the expense and concern around older rooftop units. Brand new units come with the state of the art equipment, economizers, and are warrantied. The best part for business owners – utility rebates can cover a portion of the cost, as much as 70% in Chicagoland for small business classified customers.
There are many pitfalls to owning and operating a business, and one of those I see most often is the difficulty to maintain outdoor lighting. Most businesses can internally change an incandescent or fluorescent lamp, but maintaining outdoor lighting is more complicated. Traditional outdoor lighting consists of a high intensity discharge bulb and ballasts. Often requiring a lift or extension ladder to reach, these lights use a ton of electricity and can last 5,000 to 20,000 hours However, as the ballast is worn, that life span can decrease significantly.
The main benefit that a business will enjoy is the longer lift of LED fixtures and replacements. New fixtures can last from 50,000 hours up to 100,000 hours, and really that longevity is only limited based on the quality of the driver. This is so key when businesses can spend hundreds of dollars for service companies to come and change a HID or ballast frequently, as sacrificing safety or visibility for a business is not often an option.
Energy savings is also a key component of LED lighting performance. Typical exterior LED lights use 20-30% of the wattage of comparable traditional fixtures. This can lead to incredible Returns on Investments (ROI), even without incentives from utilities. As an incredible bonus, the lumens per watt of these outdoor fixtures continues to increase, and in 2017 we seem to be on the precipice of 200 lumens per watt.
Since exterior lights are often left on for longer hours, especially in our cold and dark winter nights in Chicagoland, the energy savings is even more important.
Brighter, Crisper Light
Exterior LED lighting is also available in a higher kelvin color temperature, creating a brighter and crisper light. This is obvious to the eye, if you’ve seen a store with new LED lights next to a store with older lighting. People also describe this is daylight, but we feel that the ideal color temperature in Chicagoland for exterior lighting is 5000k.
It literally can make a business feel more inviting and approachable, and is noticeable as you drive down a street in your town. In fact, I remember years ago as gas stations in our area were converting to LED and you could notice the difference that LED had on the approachability of certain gas stations. It felts safer, more inviting, and likely had increased sales definitively from this investment.
Finally, exterior lighting with LEDs pair great with advanced controls. Photocells and occupancy sensors are better partners with LED, as the drivers are more responsive and the lights turn on instantly and can dim. Often, we see businesses add occupancy sensors to exterior lighting to add a layer of safety or additional ways to check footage of security cameras.
One final note — older lighting ballasts are incredibly difficult to maintain. Often, you will hear a loud audible buzzing sound near older exterior lighting. What better way to discourage customers to your business than a loud and irritating sound as they walk in from the parking lot? Replacing the lamp will not fix this, but a new LED fixture or solid retrofit solution will. Converting to LED will not only solve all of the above issues and enjoy a lot of the benefits, but it will also pay for itself in energy and maintenance savings.
Incentivizing your sales team is the best way to grow your business, hands down. However, the sales commission structure can be one of the most difficult and nuanced components to get right in a business. I share this after my experience in starting a growing a sales team.
At Verde, we are very transparent in our sales commission agreement between our energy efficiency analysts and the company.
Base – provides security
It is important to provide a base salary for a sales professional, since it can take a while to ramp up and become successful. Even for the fastest learner, they need time to train and learn.
Providing a base can also help smooth out normal business cycles, which happen to almost any industry. For our company, we often have deadline around increased utility rebate fiscal years. This can lead to wild variations in income for the analysts. Therefore, the base can provide stability throughout the year.
In our sales commission structure, we have a base of $26,000. Once this is repaid to the company by selling $260,000 (at a 10% commission rate), the sales commission agreement goes up to 14%. We currently reset this sales commission structure quarterly. We find this works better than annually as it triggers 4 times a year where the team is motivated to sell more. When we previously ran with this sales commission structure annually, it only created one large incentive period. This was hard to bring on new people during the mid-year, as well as took a long time to generate higher sales incentives.
Finally, we put a lot of time and thought into the $26,000 base salary. We did not want to make it too low, where there were times that people could not make rent or take the bus. Additionally, we also did not want to make it too high, where we make people comfortable with a mediocre compensation. Attracting and retaining highly impactful salesmen and saleswomen is the goal, whereas people that are not ambitious will not be attracted not succeed in this compensation plan.
**Update – we have increased our base salary to $52,000 in 2019. This is to keep up with trends of millennials that would prefer a more consistent salary over the highs possible with more of a commission basis structure. We have also lowered our rates of commission to 3-6%, and do not require the base to be repaid – so commissions come on the first job.
Sales Commission Structure – Rates
I feel very strongly that good incentives for sales professionals should increase after a certain level is met, not decrease. This seems counterintuitive to people when I explain it. However, it rewards high achieving individuals in the organization. It also makes people hungry when it is most important, when they have already delivered to the company.
One bonus feature of this is that it also keeps talented folks – the ones that deliver most the organization also receive great compensation. That is important since keeping great people is one of the most important challenges for a company.
**In 2020, we still keep with this concept – after halfway through goals, rates increase. This allows high performs to get additional compensation when they hit goals or exceed goals. We also have bonuses and super bonuses, to keep the really high achievers engaged and getting every last energy efficient project complete.
Not basing profit on commission
In our business, we have decided not to base commission on profit, and instead base it on revenue. In general, this sales commission structure helps drive top-line growth, which a salesman or saleswoman can control. As long as they cannot set pricing, this will not negatively impact the bottom line margins of the company.
In addition, this provides a unique value to our customers. Since what we sell (energy efficiency) has a key indicator of ROI (return on investment), the sales rep is motivated to sell based on what brings down the ROI. This does not always align with what is most profitable to our company. Ultimately, we hope that this provides continuing value to our customers, both helping the company and the individual that completed the sale.
**Note, we have started providing transparency around the P&L (profit and loss) on each job for the COGS (cost of goods sold – so total revenue less the materials and installations cost of each job). This transparency drives them to achieve more, although we do not directly translate that to bonuses or commissions at the moment).
Sales Commission Structure – Challenges
One of the key challenges that we faced in our structure is that sales commissions were initially compensated too soon. We paid commission as soon as the project was closed with the customer. However, in our business, we often have to wait for the ComEd Energy Efficiency Program to preapprove utility incentives for our customer and their project. This can take anywhere from 10 days to 25 days. In addition, some of the more complicated lighting controls and special order products can also lead to delays. Our normal backlog of work can range from 20 days to 60 days.
Basically, we were writing commission checks to our energy efficiency analysts long before we received any revenue. In our current growth trajectory, we noticed that this was unsustainable. At the very least, it was an added financial burden on the company.
We made a switch to account for half of the commission at the time of sale. This provides some instant gratification). Additionally, we pay half of the commission at the time of installation and invoice. One downside of this is that it creates added work for the analyst to account and reconcile projects. Eventually as we scale, we hope to have some custom built software in place shortly to make this seamless.
While best practice is to pay sales folks when the company gets paid, we do not implement this. We continue to update our sales commission structure, so this and a higher base are both currently being considered.
Solar Commission Structure
Many of our pier companies ask us about a solar commission structure for sales. Solar in Illinois is really challenging, so I will provide some insights without complete advice. Verde has completed one solar sale (an approximately $500,000 system), so we have some experience.
Solar is similar to energy efficiency, but with some minor differences. First – solar is typically larger in scale. Our average energy efficiency job is $18,000 – while solar is much larger in revenue.
Additionally, solar has lower margins if subcontracted. When margins are solar, commissions are smaller. We have a similar challenge around HVAC commissions. Our COGS margins are closer to 15% of HVAC projects, whereas our core projects of lighting and refrigeration have COGS margins much higher. For that reason, it can be a challenge to keep commissions consistent through different job types.
Finally, solar projects have a greater cash flow from the client to the project. If they do not chose a solar PPA to finance the project, a business owner must put out a lot of capital expense to pay for this. The benefits of the solar will come in tax credits, savings in energy, and Renewable Energy Certificates (RECs).
In 2007, Illinois passed a law to tax customers and spend that taxation on energy efficiency. ComEd, People’s Gas, Northshore Gas, and Nicor Gas all spent incentive and rebate money out of the tax collected on each utility bill. This spending ultimately reducing energy usage with each tax dollar spent. This program through the electric utility was branded the ComEd Smart Ideas Program. Now referred to as the Comed Energy Efficiency Program
How to ComEd Smart Ideas Energy Efficiency Program Came to Be
In December 2016, Illinois doubled down on this successful ComEd energy efficiency program and increased this spending to almost $400 million annually. This law is commonly referred to as the Future Energy Jobs Act. This law was passed by an unlikely coalition in Illinois – Exelon (ComEd’s parent company), environmentalists, groups focused on job growth (including Governor Rauner), as well as other small groups.
Job growth in Illinois due to this ComEd rebate program is significant, including Verde in Chicago. All of our team of Chicago energy efficiency experts have jobs from this spending. A significant amount of our revenue is generated by partnering with ComEd on various programs for business. In fact, not to braggadocious but we were awarded the 2017 ComEd Trade Ally Partner of the Year award recently.
Different Types of ComEd Rebates in Illinois
There are a variety of ComEd rebate programs, including those for businesses and residential. Business energy efficiency rebates focus on LED lighting, and refrigeration improvements (including EC Motors with Evaporative Fan Speed Controls), HVAC, smart thermostats, and compressed air measures. The ComEd Smart Ideas energy efficiency program and incentives help reduce the cost to upgrade to energy efficiency measures. The rebates cover 50-75% of the cost of upgrades. Up to 100% of the cost for some items are possible for businesses classified as 0-100kW in their usage.
Why You Should Get an Assessment for the ComEd Energy Efficiency Program
ComEd spends this money because it is required by law. However, they do support this program fairly enthusiastically because of the goodwill generated for their customers through this program. Since we all pay into this tax program, if you do not participate, you are funding your neighbor’s energy efficiency. In fact, if you operate a business, you are funding improvements to your competition. So please reach out to us today for a free energy efficiency assessment for your business by clicking below.
Increased profitability can be found in a variety of unexpected places in your business. How can we be more energy-efficient? Here are a few sustainable solutions that you might not have thought about in how we can be more energy efficient and grow the bottom line of the business that you operate.
It still surprises me how many businesses in Chicago do not have programmable thermostat in their business. Dropping your heat down in the winter, or raising the temperature in the summer, during non-business hours can lead to dramatic energy savings. Smart thermostats can take you even into deeper savings on high electric bills in the summer and high gas bills in the winter.
Computers and their associated equipment have some exciting features these days – low energy usage sleep settings, as well as more energy-efficient screens. When you combine these with a smart power strip, one that cuts the power to accessory items when not in use, you can find a little more profit in your business with a pretty low cost move.
In stalling LED lights is a must, both to save energy on the business and labor side. However, one new trick that really takes profitability to the next level are sensors that control both for daylight and occupancy. If there is enough daylight in the room that lights don’t need to be on, our latest fixtures will only provide a small amount of additional light, if any. One extra benefit of this is dimmed fixtures will actually create less heat on the LED driver, leading to even longer lasting lifetime usage than planned.
Yes, a very low cost item like weatherstripping can really impact your businesses bottom line. Reducing the energy usage in summer and winter not only makes your business more comfortable for your customers, but also saves energy business costs and will lead to increasing profitability.
Many of these items are supported in cost through your local utility energy efficiency program. Ask an expert on our save energy solutions teamfor more information on savings potential, your out of pocket cost, and any associated rebates available to you. Hint Hint – weatherstripping an smart power strips are likely available to you at no cost if your business kW usage is under 100kW. If you operate a business in Illinois and want more information, don’t be shy!
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Verde Energy Efficiency Expert1801 W Berteau Ave, Suite 202 Chicago, IL60613 T (779) 333-0821